Engie Chairman Says Veolia’s Offer for Suez Stake Is Too Low

(Bloomberg) --

Veolia Environnement SA’s offer to buy the majority of Engie SA’s stake in Suez SA for 2.9 billion euros ($3.4 billion) is too low and there may be alternative bids, Engie Chairman Jean-Pierre Clamadieu said, suggesting Veolia may have to raise its offer for its smaller French water and waste-treatment rival.

Veolia made a surprise bid on Sunday to acquire a 29.9% stake in Suez from Engie, the first step to a full takeover. The deal, deemed “particularly hostile” by Suez Chief Executive Officer Bertrand Camus, would create a global waste and water giant with more than 40 billion euros in revenue as global warming and pollution boosts the need to recycle resources and treat hazardous products.

“The value of Suez is higher than the basis of these discussions,” as shown by the 5.7% jump in Veolia shares Monday, Clamadieu said on BFM Business television Friday. He asked Suez to come up with another offer, and said that Engie will consider an alternative bid “with great care if it can be implemented rapidly.”

Speaking on BFM Business television Thursday, Suez Chairman Philippe Varin reiterated his support for Camus and his plan to turn around the company. The board has encouraged the CEO to seek alternatives to Veolia’s offer, Varin said.

Veolia’s bid got some support from the French government, which owns 24% in Engie. The creation of a global champion is “a good strategic idea, but it shouldn’t be made at any price,” Finance Minister Bruno Le Maire told journalists on Friday.

A pre-requisite is a “good valuation” of the Suez stake held by Engie, and talks should ensure that all stakeholders are happy with the deal, he said.

The proposed deal “makes sense,” Prime Minister Jean Castex said Thursday. Any bid for part or all of Suez must preserve jobs and avoid the creation of monopolies in water and waste, Castex said, adding that he’d rather have French investors in Suez to avoid “a loss of sovereignty in this strategic industry.”

Clamadieu asked Veolia and Suez to hold talks to see if Veolia can raise its offer and make it more “inclusive” for Suez’s management and employees. The project to create a French giant in environmental services is “attractive in some ways,” he said.

Suez shares were trading 1% higher at 15.04 euros at 5:13 p.m. in Paris, nearing Veolia’s 15.50 euro-per-share offer. The stock surged 19% on Monday, the first trading day after Veolia’s move.

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