Veolia Lifts Bid for Engie’s Suez Stake to 3.4 Billion Euros

(Bloomberg) -- Veolia Environnement SA raised its bid for most of Engie SA’s stake in Suez SA by 16%, making a final push to clinch a deal that would be a prelude to a full takeover.

The French waste and water giant is now offering 18 euros a share, or about 3.4 billion euros ($4 billion), for 29.9% of Suez held by Engie, according to a statement on Wednesday. It also committed to maintain full employment of Suez workers in France if it takes control of the company.

Suez urged Engie to reject Veolia’s request for a bid acceptance by midnight, and said that there is no guarantee that other shareholders will benefit from a cash offer at the same price and conditions as Engie. Its board will “put all the means at its disposal to avoid a creeping takeover or de facto control by its main competitor,” Suez said in a statement.

Suez shares jumped as much as 8% and were trading up 4.6% at 15.61 euros as of 1:29 p.m. in Paris, the highest since February. Engie rose 0.6% and Veolia gained 1.4%.

Engie’s board is due to meet later on Wednesday to determine whether to accept the offer, before an end-of-day deadline. Chairman Jean-Pierre Clamadieu has described the decision as a “a very, very heavy responsibility.”

Suez has fiercely resisted the prospect of a takeover by Veolia, asking it to suspend talks with Engie and creating a “poison pill” to frustrate its rival’s plans. The French government has also warned against job losses and said a deal should not be hurried.

Tender Offer

If Engie accepts the improved offer, Veolia said it will make a tender offer for the remainder of Suez’s shares, but only on a friendly basis. The company proposed a period of six months for negotiations between the two sides to reach an agreement on a takeover.

“I have good hope that we’ll get a favorable recommendation from Suez’s board” after months of talks, Veolia Chief Executive Antoine Frerot said on a conference call on Wednesday. If talks fail after six months, Veolia will present its offer direct to all shareholders, he said.

If Engie accepts Veolia’s revised bid, it would be the first step to creating a global giant in waste and water. But the buyer would still need to persuade other Suez shareholders to sell, and resolve any competition concerns.

In a bid to thwart Veolia’s approach, Suez has sought to make antitrust issues more complicated. It made its French water assets non-transferable for four years under certain circumstances. Selling the business would require prior approval from a foundation governed by Dutch laws and from the company’s board, before any change of control.

Veolia’s offer for six months of talks is conditional on removal of the poison pill, the company said. Asked what he would do if Suez’s board refuses to do so, Frerot said: “It won’t be simple to build something together with the Dutch foundation.”

A rejection from Engie would be a reprieve for Suez, which has been doing all it can to remain an independent company. It would also be a big setback for Frerot, but not necessarily the end of his effort to cement his group’s global leadership in environmental services through an acquisition.

Suez’s board is working on a solution to suit all the company’s shareholders, it said Wednesday. Suez reiterated the potential antitrust issue, which would arise if the takeover were to happen, while Veolia has said it would be resolved by asset sales.

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