Suez in Advanced Talks to Sell Australian Arm to Cleanaway

Suez SA is in advanced talks to sell its Australian business to Cleanaway Waste Management Ltd., according to people familiar with the matter.

A deal could value the French firm’s waste-treatment assets in Australia at about 2 billion euros ($2.4 billion), said one of the people, who asked not to be identified as the information is private. Talks are ongoing and could still be delayed or fall apart, the people said.

Cleanaway has expressed interest to Suez about the asset purchase, while there’s no certainty that talks will lead to a transaction, the Sydney-listed company said in an exchange filing on Thursday. A representative for Suez in Australia didn’t immediately respond to requests for comment.

A deal would fulfill Suez’s pledge to use divestitures to trim debt, boost return to shareholders, and invest more in new technologies as it seeks to fend off a hostile takeover approach by French rival Veolia Environnement SA. The move would also fuel tensions between Suez and Veolia, which have sparred in the media, the boardroom, and the courts since the suitor unveiled its plans at the end of August.

Veolia, which bought almost 30% of Suez in October and is planning to buy the rest as part of a plan to create a global leader in water and environmental services, has warned that it would seek to oppose the sale of a series Suez’s strategic assets -- including its waste activities in Australia -- by any legal means.

It also said it might reduce its 18 euro-per-share offer for Suez shares it doesn’t already own if Suez were to sell key businesses or take actions that would destroy value. A spokesman for Veolia couldn’t immediately comment on the Suez’s talks with Cleanaway.

Suez shares were trading 0.3% lower at 17.45 euros at 9:46 a.m. in Paris Thursday, while Veolia shares rose 0.6%. Cleanaway closed 4% higher in Sydney.

An acquisition would make Melbourne-based Cleanaway among the largest waste treatment operators in Australia. It’s searching for a new chief executive as its longtime leader Vik Bansal announced plans to step down after an investigation into his workplace conduct.

©2021 Bloomberg L.P.

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