Suez Loses Court Bid to Challenge Veolia’s $4 Billion Stake

Veolia Environnement SA received another boost in its takeover bid for Suez SA after a Paris court rejected a challenge from its smaller rival that could have jeopardized its initial acquisition of a 29.9% stake.

Veolia’s Aug. 30 announcement that it was planning to buy the stake from energy giant Engie SA as a first step toward a full takeover didn’t kick-start a pre-offer period, the Paris court of appeals said. The ruling backed an earlier decision from France’s stock-market regulator.

In Thursday’s case, Suez challenged a decision by the Autorité des Marchés Financiers not to institute pre-offer rules before Veolia acquired the 29.9% stake. That designation would have prevented Veolia from buying the shares as it did in October for 3.4 billion euros ($4.1 billion).

After months of being rebuffed by Suez’s management, Veolia escalated the tension between the rivals on Sunday by making a hostile takeover offer for the French utility. Thursday’s ruling is the latest in an intense legal battle playing out in about half a dozen courts as part of Veolia’s bid to create a world leader in waste and water services.

A Suez spokeswoman declined to immediately comment on Thursday’s ruling.

Separately, Suez issued a statement backing an offer made by French lawmakers earlier this week to name a neutral mediator to try to find common ground between the two rivals. Suez also reiterated that its goal is to preserve the existence of two separate French waste and water utilities.

Veolia said in a statement that the ruling confirms that it was entitled to acquire the 29.9% stake.

It’s that October transaction with Engie that initiated the pre-offer phase, according to Veolia and the AMF. At that time, Veolia specified that the offer price for its takeover would be 18 euros per share, the same amount it paid for Engie’s stake.

Key to the Paris judges’ determination on Thursday was the fact that the August announcement specified that the acquisition of the 29.9% stake was a precondition for any takeover offer and that Veolia didn’t provide a precise price.

The ruling is the second boost for Veolia in recent days. After losing two rounds in a tussle over requests from Suez workers to have a say early on in the process, Veolia scored a win last week that allowed it to recover the voting rights attached to its 29.9% stake.

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