Veolia Finalizes Deal to Buy Suez After Long Takeover Saga

(Bloomberg) -- Veolia Environnement SA finalized a deal to buy Suez SA, reinforcing its global leadership in water and waste-treatment following a lengthy takeover battle.

The agreement announced Friday builds on a preliminary accord between the two utilities last month and includes a commitment to sell back about two-fifths of its rival to a Franco-U.S. group of investors.

The deal allows Veolia to proceed with a full takeover of Suez in the coming months by acquiring the roughly 70% of the company it doesn’t already own, pending some regulatory approvals. The transaction will create a giant in environmental services under the Veolia umbrella, with annual revenue of about 37 billion euros and assets from the U.S. and Latin America to Asia and Australia.

Meridiam SAS, Global Infrastructure Partners, Caisse des Depots et Consignations and CNP Assurances agreed to buy some of Suez’s assets in France and countries such as China, India, Italy and Morocco, with a view to creating a new Suez with revenues of nearly 7 billion euros. Meridiam and GIP will have each a 40% stake, while CDC and CNP will hold a combined 20%.

The offer from the consortium of investors remains subject to several conditions, including a confirmatory due diligence. The group will make a binding offer by June 29 at the latest, according to the statement.

Subject to regulatory and competition approvals, Suez and Veolia have set a common objective of closing the public offer and the sale of the new Suez to the consortium, planned for the end of 2021, they said.

The boards of Veolia and Suez said the offer of the group of investors was “satisfactory,” without detailing the price.

Veolia is offering current Suez shareholders 20.50 euros a share, including their regular dividend of 65 euro cents. The takeover values Suez’s equity at about 13 billion euros, and gives it an enterprise value of 26 billion euros including plain-vanilla and hybrid debt, according to Veolia.

Shares of Veolia have jumped about 30% this year, while Suez is up more than 20%.

Veolia has said it will finance the deal partly with a capital increase of as much as 2.5 billion euros and with some asset sales.

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