(AOF) – Veolia has announced the signing of a unilateral purchase agreement by which Macquarie Asset Management irrevocably undertakes to acquire 100% of the capital of Suez Recycling and Recovery UK Group Holdings Ltd, bringing together Suez’s waste activities in UK. The sale proceeds for Veolia will represent approximately 2.4 billion euros. The completion of this transaction provides an effective response to the main concerns of the British competition authority.
It remains subject to its approval as well as to the lifting of the right of first refusal granted by Veolia to the new Suez on the occasion of the merger in 2021.
Following the completion of this antitrust remedy, Veolia will remain a major player in the waste treatment market in the United Kingdom with a turnover of approximately 2 billion euros.
“We are very satisfied with this transaction, which is taking place under excellent conditions which once again demonstrate the great attractiveness of the activities of environmental services and the relevance of our proposal for remedies to the CMA. It will allow a strong creation of value while strengthening our ability to invest in strategic markets. The valuation of these assets reflects both the initial price and the synergies provided for by the merger, in line with all the disposals carried out within the framework of the antitrust authorizations, which are higher than the acquisition price of Suez, commented Estelle Brachlianoff, Chief Executive Officer of Veolia, Following this transaction, Veolia will remain one of the major players in the waste sector in the United Kingdom and more broadly in the market environmental services in the area, which remains strategic for the Group.”
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Key points
– World leader in environmental services, born in 1853;
– Activity of €28 billion, split between water management for 38%, waste management for 39% and energy services;
– Steady increase in international activity: 21% in France, 38% in the rest of Europe, 25% in the rest of the world and the rest in the “Global business” – business services to large companies ;
– Business model based on the complementarity of the 3 businesses of the group in a logic of use and recovery via the circular economy;
– Non-operable open capital (4.5% of capital for Caisse des Dépôts and 4.1% for employees), the 12-member Board of Directors being chaired by Chief Executive Officer Antoine Frérot who, on 1
er
July, will hand over her position as Chief Executive Officer to Estelle Brachlianoff;
– Solid balance sheet after the 2021 capital increase with net debt reduced to €9.5 billion compared to €16.5 billion in equity, and cash in excess of €15 billion which will be reinforced in 2022 by disposals in municipal water and waste in France and in water activities internationally.
Challenges
– Impact 2023 strategy “to be the reference company for ecological transition”: growth of differentiating activities: treatment of hazardous waste, depollution of soil and industrial water, energy efficiency of industries and buildings, recycling of plastics, recovery of bio-waste, industrial ecology offers (circular economy loops, pooling of utilities, etc.) / digital reinvention of traditional businesses – water, waste, energy networks / solid revenue growth, €1 billion in cost savings on 4 years, debt ratio below 3 over the period and 2023 dividend of €1.30;
– Innovation strategy based on 3 pillars: coordination by the VERI R&D center organized into 5 departments – biosystems, environment & health, process engineering, digital innovation and industrial support / Via Veolia open innovation focused on innovative responses to needs precise / global information sharing network with 200 researchers and 200 partnerships and “Open Playground for co-construction of ecological solutions;
– 2020-2023 environmental strategy: reduction of CO2 emissions by eliminating coal-fired power plants in Europe by 2030 / GreenPath, internal platform for evaluating the environmental footprints of solutions / increasing the efficiency of drinking water networks;
– Execution of the partnership with Saudi Arabia in the water and waste treatment businesses;
– Benefits of diversification in the dismantling of nuclear power plants, biomethane, waste treatment, in the United States and Russia (1.5% of revenues).
Challenges
– Favorable impact of raw materials inflation in the energy, plastics, paper-cardboard and recycled metals branches;
– Risks related to the Russia-Ukraine war: 0.3% of revenues in the area (waste and water management activities in Ukraine and Russia) but study by the municipality of Montreal of the group’s commitments in Russia;
– 2022 objective of “solid revenue growth – around €37 billion with the integration of Suez, a 4 to 6% increase in operating profit, net income around 1, €1bn, a debt leverage of 3 and a growing dividend with that of earnings per share, i.e. 40%.
Threat to the European energy system
The leading importer of German gas, Uniper posts 54% of the volumes it buys from Russia. Following the war in Ukraine, the group had to acquire the volumes it lacked on the spot market, the prices of which had exploded. In difficulty, he requested aid from the German state, which raises concerns for all European energy companies. Nevertheless the German RWE and the French Engie reacted by arguing that their situation was very different. RWE stressed that it was less dependent on Russian gas. As for Engie, it benefits from the diversification of its sources of supply, with an increase in the volumes of LNG delivered to France and contracts with Norway and Algeria. The group has also adapted its hedging strategy to strengthen its resilience.