The two press releases from Suez fell on the night of Monday 5 to Tuesday 6 April: the water and waste management group is ready to sell to Cleanaway Waste Management its recycling and recovery activity in Australia, however deemed “Strategic” by Veolia, now the largest shareholder of its historic rival with 29.9% of the capital; at the same time, he reiterates his wish for a negotiated solution with Antoine Frérot’s group, which has launched a hostile takeover bid (takeover bid) for the remaining 70.1% of his historic rival.
The leaders are thus putting pressure on Veolia to get it to discuss its own project, presented on March 21. In particular, it provides for the acquisition by Veolia of all of Suez for 20 euros per share (against 18 euros offered until then), then the resale to the consortium made up of investment funds Ardian and GIP activities in water and waste, in France and internationally, representing 9.1 billion turnover. This scheme, which would allow the maintenance of two large French environmental services groups, was immediately rejected by Mr. Frérot.
Suez could withdraw 1.6 billion euros from these Australian assets. This represents a multiple of 12 times ebitda (gross operating income). That is more than the nine times Veolia’s offer on Suez, underline its managers. Proof, according to them, that the price offered by Veolia does not value Suez at its fair value and that the company is worth “Significantly more” that the 18 euros paid in October to the energy company Engie and offered since to the other shareholders, while the title has already reached 18.3 euros on the Paris Stock Exchange.
Defenses criticized
The sales contract in Australia is ready, but it can be canceled at any time between now and May 5 if Veolia negotiates. Cleanaway would then benefit from compensation, such as landfill sites (15% of the initial perimeter). Philippe Varin, president of Suez, and its managing director, Bertrand Camus, say they are ready to meet Mr. Frérot “In the next few days”.
If no agreement is reached, the group says it will accelerate its policy of disposing of non-strategic assets (in the United Kingdom, for example) to refocus on water, technologies and industrial waste treatment and dangerous goods with higher added value, in accordance with its “Shaping Suez 2030” strategy. In addition, Suez was to send, Tuesday April 6, a letter to the Financial Markets Authority (AMF). On the eve of the Easter weekend, it had published a very critical statement on the defense chosen by Suez, deeming it contrary to stock market law.
This is not a decision, but a communication. The fact remains that the gendarme of the Stock Exchange invites the “prey” to review its anti-takeover defenses. He considers in particular that Veolia and Ardian-GIP are not treated fairly, since the foundation under Dutch law created in September 2020 and making Suez Eau France non-transferable – and therefore impossible the success of Veolia’s takeover bid – penalizes the first and not the latter. Suez executives deny this, arguing that the Florange law of 2014 gives the board of directors significant powers to defend itself against a hostile takeover bid, that of Veolia in this case. They consider that this foundation is part of a legitimate anti-takeover arsenal.
After the AMF press release, Veolia once again called for the foundation to be dissolved, prior to any negotiations. Response from Suez the next day: “A device for deactivating the foundation is planned in the event of a negotiated solution”. For now, the brothers enemies of water are not taking the path. The interminable saga will continue in the coming weeks. We are awaiting validation of Veolia’s takeover bid by the AMF. Then a decision by the competition services of the European Commission, which will decide whether or not Veolia can vote on certain resolutions at the Suez general meeting held by the end of June. And undoubtedly other adventures within the framework of this extraordinary battle …