Veolia Debates Whether Suez Is Still Worth 18 Euros a Share

Suez SA shares fell as much as 0.7% after Veolia Environnement SA said it’s debating internally whether its French rival is still worth the price it offered for its hostile takeover, as the utility takes steps to resist a deal.

“Some people at Veolia are wondering whether the 18 euro-per-share offer should be lowered,” a spokesman for Veolia said on Monday. The poison pill implemented by Suez’s board and its plans for asset sales “jeopardize” that valuation, he said.

Sunday’s proposal from Suez’s management that Veolia buys less than half of Suez at a higher valuation isn’t a genuine basis for further talks, the spokesman said.

Suez shares were trading 0.2% lower at 18.25 euros ($21.70) at 9:43 a.m. in Paris Tuesday. Veolia shares fell 0.2%.

Suez’s latest offer showed little sign of resolving the bitter takeover battle, suggesting the utility’s annual shareholders meeting in May or June will be the defining moment for the stalemate with Veolia.

Veolia’s apparent hesitation on Suez’s valuation comes as its target activated a legal mechanism to make antitrust issues in France more complicated for its suitor. Suez’s management has been fighting Veolia’s offer, saying it bears execution risks for its employees, shareholders and clients.

On Sunday, Suez said it would support an offer of at least 20 euros per share if Veolia lets Ardian SAS and Global Infrastructure Partners purchase a bit more than half of Suez as part of the deal.

Alternatively, Suez would allow its shareholders to consider a full takeover by Veolia at 22.50 euros per share.

Speaking to reporters Sunday, Suez Chairman Philippe Varin signaled the offer was only a first step in potential negotiations with Veolia, which it aims to complete by the “reachable” deadline of April 20.

If no agreement is found by then, Suez warned it would go ahead with its strategic review, potentially selling key assets that Veolia wants. Veolia said it was not interested in the proposal, calling it a “dismantling” of the company.

The sale of strategic assets would also jeopardize the 18 euro-per-share offer, the Veolia spokesman said, repeating a previous stance of the company.

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