Suez Is First Hostile Bid for French Target in Five Years

Veolia Environnement SA’s hostile takeover offer for water utility Suez SA is the first such attempt in five years in France, a country where the political establishment prefers consensual deals.

The last hostile bid was Vivendi SA’s successful 479-million-euro ($576 million) offer in 2016 for mobile-games company Gameloft SE, according to data compiled by Bloomberg. Big hostile deals are rarer still: One has to go back to 2007 to find one of more than 1 billion euros, the failed effort by Spanish builder Sacyr SA to acquire Eiffage SA.

Suez Is First Hostile Bid for French Target in Five Years

Would-be bidders have learned that unwelcome approaches can be stymied by the French government, which wants to avoid the job losses and corporate upheaval that often result from such deals. In some cases, the state seeks to prevent losing a so-called national champion to a foreign buyer.

“Hostile takeovers are notoriously rare in France,” said Josh Rosen, a special situations analyst at United First Partners. “For years, successive administrations have been pro-actively vocal, stepping in to protect sectors, strategic or otherwise, conscious of the reputational impacts of realignment among key national employers.”

Finance Minister Bruno Le Maire signaled Monday that France wouldn’t stand by while Veolia pursues its 18-euro-a-share offer for Suez. He said the government would ask the market regulator to look at the deal, which values all of Suez at 11.3 billion euros, and said the bidder reneged on promises to pursue a friendly acquisition. Veolia already owns 29.9% of the target’s shares.

It’s not only hostile takeovers that are problematic in France. Le Maire last month blocked friendly talks between grocer Carrefour SA and Canada’s Alimentation Couche-Tard Inc., arguing the country needed to maintain control over its food supply.

“In recent weeks alone, interventions to safeguard industries from supermarkets to sewage services have reinforced France’s reputation as the most advanced country prone to protectionist tendencies, though signs of disquiet are emerging from the French business community to such an approach,” said Rosen.

The last successful hostile mega-deal in France? That was Sanofi-Synthelabo SA’s 2004 purchase of French pharmaceutical company Aventis SA for about 54 billion euros, which created the drug giant Sanofi. The French government cleared the way for the deal by opposing the purchase of Aventis by a foreign buyer, Switzerland’s Novartis AG.

The government has raised no such obstacles in the handful of cases when the target isn’t French, such as in Sanofi’s hostile bid of almost $20 billion for Genzyme Corp. of the U.S. in 2010, or an effort by Cie. de Saint-Gobain SA to acquire control of Swiss building materials company Sika AG in 2014.

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