French engineering giants agree takeover terms for Veolia's acquisition of Suez

Veolia and Suez have reached an agreement in principle on key terms and conditions for Veolia’s acquisition of Suez.

The companies have agreed on a price of €20.50 per Suez share subject to the signature of the Combination Agreement. Subject to obtaining a fairness opinion in accordance with applicable regulations, this offer would be recommended by the Suez board upon signature of the definitive agreements.

In a statement the companies said the agreement would enable:

• the creation of a new Suez “with real growth potential, with revenues of around €7 billion”;

• the implementation of Veolia's plan “to create a global champion of ecological transformation, with revenues of around €37 billion,” in which all the strategic assets identified by Veolia will remain; and

• Veolia to commit to the “integration and mix” of the management teams at headquarters and in the countries.

The two groups have proposed that the new Suez resulting from this agreement should be owned by shareholders including financial partners from both groups and by employees. The majority of the shareholders of the new Suez will be French.

To guarantee conditions “for the long-term development of the new Suez”:

• its shareholders will have to subscribe to Veolia’s social commitments for four years from the closing of the takeover bid and undertake to maintain their positions over the long term; and

• Its scope will be the municipal water and solid waste activities of Suez in France, as well as the activities of Suez in particular in water and in Italy the Czech Republic, Africa, Central Asia, India, China, Australia, and the global digital and environmental activities.

The two sides have agreed to enter into definitive merger agreements by May 14.

Suez chair, Philippe Varin said: "We have been calling for a negotiated solution for many weeks and today we have reached an agreement in principle that recognises the value of Suez. We will be vigilant to ensure that the conditions are met to reach a final agreement that will put an end to the conflict between our two companies and offer development prospects”. Suez chief executive, Bertrand Camus, added: "This agreement in principle gives us every chance of obtaining a global solution that would offer the essential social guarantees for all employees and prospects.

Chief executive of Veolia, Antoine Frérot, said: "This agreement guarantees the long-term future of Suez in France in a way that preserves competition, and it guarantees jobs. All stakeholders in both groups are therefore winners. The time for confrontation is over, the time for combination has begun”.