Letter of intent: Will Ardian and GIP prevent “dismantling” of Suez?

Ardian expresses renewed interest in Suez
shares – this time in consortium with GIP.
17.01.2021 − 

Suez’s board of directors has unanimously welcomed an announcement by investment companies Ardian and GIP (Global Infrastructure Partners) that they intend to make an offer for Suez’s shares. A letter of intent, which Suez said it received on Sunday, “would facilitate the emergence, and in a short time frame, of an amicable solution to the situation created by Veolia’s approach”, said the French environmental services giant. 

Since August, Suez has been attempting to fend off a “hostile” takeover by competitor Veolia, who already secured nearly 30 per cent of Suez’s shares from the energy utility Engie at the beginning of October. At that time, Ardian had signalled its interest in acquiring Suez as part of a larger consortium, but later withdrew citing a need for additional time to prepare its offer and company policy of pursuing only friendly offers.

With Ardian now prepared to make an offer together with GIP, Suez said it was willing to enter a dialogue with Veolia which it hoped “would reinforce both of the two French leaders in environmental services”.

Sunday’s letter of intent “paves the way to a global solution, through different arrangements all with equivalent effect [to Veolia’s offer],” Suez said, noting that Ardian and GIP planned to offer its shareholders the same €18 per share that would be offer by Veolia. The environmental services concern also highlighted a key difference between the new offer and that made by Veolia, namely, that the Ardian/GIP solution would not require “dismantling” its business.

Because of the overlaps between Suez and Veolia’s businesses, especially on the French water services market, it was expected that Veolia would need to sell off substantial parts of Suez’s business in order to obtain anti-trust approval for the acquisition of its largest competitor. The required divestitures would also have included some waste activities in France.

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