France Urges Friendly Resolution to Suez-Veolia Stalemate

The French government reiterated its desire for Suez SA and Veolia Environnement SA to find a “friendly” resolution to their takeover battle. Yet it was unclear whether the companies were ready to end hostilities and begin meaningful talks.

The months-long stalemate between Veolia and its takeover target, Suez, was shaken up on Sunday by the emergence of a possible rival offer from two private equity firms. While the new proposal should be a catalyst for the first formal negotiations between the French waste and water giants, the company’s bosses continued to talk past each other on Monday.

After months of refusing to engage with Veolia, Suez Chief Executive Officer Bertrand Camus said he was ready to talk -- about the 11.3-billion-euro ($13.6 billion) friendly takeover proposal from Ardian SAS and New York-based Global Infrastructure Partners. His counterpart at Veolia, Antoine Frerot, said he wouldn’t discuss the private-equity approach, but was willing start negotiations about his own takeover proposal.

Finance Minister Bruno Le Maire, fresh from a decisive intervention in a proposed $20 billion French supermarket deal, said it was for the companies themselves to resolve the stalemate.

“I’m in favor from day one of a friendly solution in this rapprochement matter between Veolia and Suez,” Le Maire said on RTL Radio. He didn’t say whether the government would find a private equity takeover of Suez acceptable, but given the economic situation and fears about employment, he urged business leaders to “pick friendly options rather than unfriendly ones.”

French Saga

Private equity’s entry into the fray is the latest twist in a protracted battle between Suez and Veolia. The saga is playing out in the boardroom, the courts and the French political arena.

Suez’s board unanimously welcomed the move from Ardian and GIP, whose potential bid matches Veolia’s 18-euros-a-share approach. Camus said the offer would preserve jobs and competition in the French market -- both priorities for the government due to upcoming elections. Representatives of several Suez workers’ unions gave public support to the private equity deal.

Veolia, which acquired a 29.9% stake in Suez from Engie SA last year, gave no indication that its plans have been disrupted by the possibility of a rival private-equity bid.

“For now, there’s only one project on the table, and I’m ready to discuss within the framework of that project,” Frerot told reporters, referring to his own takeover proposal. If there’s no agreement with Suez’s management, Veolia will proceed with a hostile bid and sees no need to engage with Ardian, he said.

For its part, Ardian gave little indication that it was making a decisive intervention. Mathias Burghardt, head of the firm’s infrastructure business, said it was still up to Suez and Veolia to find a solution to their standoff.

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