Why has Veolia bought a 29.9% stake in SUEZ?


We acquired a 29.9% stake from Engie on 5 October 2020 as the first step in Veolia’s ambition to create the world champion of ecological transformation, built on complementary foundations in established European markets and shared potential in key growth regions of Asia and the Americas.

Our goal is to acquire the remaining SUEZ shares and complete a merger of Veolia and SUEZ, in a deal which would benefit both SUEZ and Veolia shareholders.

Why did Engie decide to sell its stake to Veolia?


Following a rigorous sale process, the board of directors of Engie decided that Veolia had the most attractive offer for Engie, based on a fair valuation of the equity stake, the strength of the industrial project and the guarantees provided to all stakeholders.

The French state approved Engie's decision to put itsstake in SUEZ on the market, in order to clarify its strategy. During the saleprocess, the Minister of the Economy indicated that Veolia’s project to createa champion of ecological transformation was “a good strategic project” andrequested “a good valuation” for SUEZ, which resulted in the increase in theprice offered by Veolia from € 15.5 per share to € 18.


What are the terms of Veolia’s offer?


Veolia has made a transparent commitment to offer SUEZ shareholders the same terms accepted by Engie for its 29.9% stake: €18 per share (coupon attached). This price is possible thanks to the well-identified industrial synergies that will be achieved by the merger, built on our clear strategy to both navigate current economic conditions and create a future-proof business with long-term potential. Veolia’s very foundations are in line with this objective. 

Our offer represents a 75% premium over the closing share price on July 30, 2020 and is over 35% above the share price when the Shaping SUEZ 2030 plan was announced back in October 2019. It is also higher than SUEZ’s share price at any point in the past five years. 

The all-cash offer would be paid on completion of the transaction following regulatory approval.

Why are you making your tender offer formal now?


We believe that time is of the essence and our offer will finally help to clarify the process for the employees of both SUEZ and Veolia as well as for all SUEZ’s shareholders. 

We have been working on our offer for months now. We initially expressed our intention to engage constructively with the SUEZ board and not to table an unsolicited tender offer for the company. On 7th January 2021, we formally submitted our draft offer proposal to SUEZ’s board of directors for their consideration on the basis that a constructive dialogue is in the interest of ALL shareholders. 

Instead, the board and management of SUEZ chose to focus their energies on designing and implementing stalling tactics, purely financial alternative solutions and undermining the rights of shareholders to have their say by standing in the way of our offer. 

The Board of Directors of Veolia collectively decided on Sunday 7 February, that the formal filing of a tender offer is the only action likely to respond both to the repeated requests of SUEZ’s management and to provide employees, customers and shareholders of both groups with an unambiguous, transparent and definitive clarification.

Is this now a hostile bid?


This marks the end of Veolia’s intention to seek support from the board of SUEZ.  That being said, Veolia remains open to resolving the situation in an amicable way to the extent discussions are focused on the implementation of its own project, not that of  Suez, Ardian and GIP. 

This change of intention is a consequence of SUEZ’s January 17th announcement presenting the project with Ardian and GIP as their sole alternative and the dialogue between the two parties which took place on February 5th which was not able to determine that SUEZ would consider Veolia’s project. In addition, SUEZ confirmed in writing that it has not given up its project with Ardian and GIP nor was willing to put on hold its numerous ongoing legal actions. 

The formal tender offer filed by Veolia with the AMF provides transparency and clarity to both the market and the board of directors of SUEZ. Mr Varin has long been requesting a formal offer from Veolia, indicating that our project of January 7th was a mere intention of offer. 

Veolia is willing to continue a dialogue on the key areas raised in January, namely the perimeter, the social commitments and the introduction of a subsidiary offer in shares. 

SUEZ’s board of directors has one month to issue a reasoned opinion to approve or reject Veolia’s offer, and the information consultation of the SUEZ works’ council must take place during the same timeframe. This leaves time for SUEZ and Veolia to reach an agreement in the interest of both parties and all stakeholders. 

Can the French government stop the bid?


Veolia and Suez being listed companies, the French Government is not in a position to prevent a tender offer on a French Group by another French Group. 

The French state approved Engie's decision to put its stake in SUEZ on the market back in July 2020, in order to clarify its strategy. During the sale process, the Minister of the Economy indicated that Veolia’s project to create a champion of ecological transformation was “a good strategic project” and requested “a good valuation” for SUEZ, which resulted in the increase in the price offered by Veolia from € 15.5 per share to € 18. 

Opposing Veolia's industrial project would mean supporting an alternative financial solution which consists in selling SUEZ to short term investment funds, including an American fund, whose requirements in terms of financial return are unsustainable in our sector. In our opinion, this clearly indicates an inevitable dismantling of SUEZ in the coming years.

What are the implications of the 8 February 2021 Nanterre commercial court order seeking to prohibit Veolia from initiating a tender offer for SUEZ?


Veolia confirms that its public tender offer for the entire capital of SUEZ was validly filed with the Autorité des marchés financiers (AMF) on Monday 8 February. This took place  prior to an additional attempt by SUEZ to block it with a court order issued by the commercial court of Nanterre.  On the same date, the AMF issued a filing notice formally initiating the offer period. 

In accordance with applicable AMF rules, this offer will be subject to a conformity review and the AMF decision should be made public around the end of March 2021.

Are ordinary dividends included in the offer price? 


Dividends due to be paid between now and the completion of the transaction are included in the proposed €18 per share offer, mirroring the terms agreed with Engie for its 29.9% shareholding in SUEZ.

Is there anything that could affect the offer?


We are committed to the success of this plan but if SUEZ proceeds with a significant or strategic asset divestiture, it would materially affect our proposal and we would have no choice but to re-assess our interest in acquiring the control of SUEZ, in accordance with the terms and conditions of our draft offer document. 

SUEZ shareholders should have a say on any such decision by SUEZ and, if deprived from such right, should consider whether the board acts in the best interests of the company, its shareholders and other stakeholders. 

Should such a divestiture be attempted without the prior consultation of the shareholders, we would take legal action to prevent such divestitures. Shareholders must consider this when assessing if the board represents their best interests.

Can SUEZ shareholders receive Veolia shares rather than cash?


Veolia’s offer is an all cash offer. However, in its letter to the SUEZ board on 7th January 2021, Veolia proposed a limited subsidiary offer in shares, designed for the benefit of the two companies’ many common shareholders as well as those looking to benefit from Veolia’s industrial plan. The precise and final conditions will be defined in due course.


Are you anticipating any antitrust issues?


Potential issues in key markets have already been identified and we do not anticipate any significant difficulty in obtaining regulatory authorizations from competition authorities. For instance, in France, Meridiam has been identified as an excellent potential buyer to purchase SUEZ’s water assets due to its unique long-term approach. Given Meridiam’s track record we believe they have the ability to boost the business with fresh capital whilst safeguarding jobs.  

What are your plans for SUEZ’s water activities?


Meridiam, a highly reputable French infrastructure management company, has committed to acquiring all the activities of Suez Eau France and its subsidiaries, subject to obtaining required merger control approvals.

Local utilities have been at the heart of Meridiam's strategy since its inception in 2005. Funds managed by Meridiam are managed for a minimum of 25 years and allow it to make long-term commitments of this nature. Meridiam also has a track record of working closely with French regional authorities through major projects including transport, social and energy infrastructure.

Is there a risk that antitrust bodies could block the deal?


We do not believe so. Veolia and SUEZ have highly complementary global footprints. Any potential issues in key markets, including France, have already been identified and will be addressed via carefully selected divestitures. From an international perspective, we expect limited disposals involving very few assets.

What antitrust steps have been taken so far?


In line with our anticipated schedule, the pre-notification processes have already started, notably with the European Union. We expect all antitrust issues to be resolved in the next 12 months.

Could you withdraw your tender offer antitrust condition precedent before you have got the green light from the relevant antitrust bodies?


 Yes, we could when we have reached enough comfort during the remedies discussions with the European Commission, several months down the road.                   

Would an alternative offer without antitrust issues be quicker?


A competing offer by purely financial investors, if ever launched, would not offer faster payment. According to law professor Xavier Boucobza, adviser to Veolia, "the stock market law is clear, if there are several offers their calendar must be aligned with the longest", he explains. Even in the absence of antitrust factors, it would therefore be necessary to wait for the end of our antitrust review in progress to complete any third-party transaction.


Has Veolia recovered its voting rights on the SUEZ shares acquired from Engie ahead of the SUEZ next General Meeting?


Yes - A French court has ruled in favour of Veolia on February 3rd and confirmed that Veolia must immediately recover the voting rights for its 29.9% stake in SUEZ, paving the way to the creation of a world champion of ecological transformation.

The Nanterre Judicial Court ruled that information and consultation requests from SUEZ’s works council regarding Veolia’s intended merger of the two groups were not justified at this stage of the project and that the suspension of voting rights relating to Veolia’s stake must be lifted. 

Veolia has already gone far beyond its legal obligations to ease the consultation process by voluntarily offering expert representatives of SUEZ’s works councils a secured access to an extended data room containing sensitive documents. This data room remains available for the expert to be appointed, if any, by the appropriate works council of SUEZ, all in accordance with the one month mandatory special public tender information consultation regime

Is there an alternative to Veolia’s tender offer for SUEZ?


On Sunday 17th January, financial investors Ardian and GIP submitted,  subject to due diligence, a non-binding letter of intent to SUEZ at a similar price to Veolia’s offer, € 18 (coupon attached). 

As stated by Mathias Burghardt, head of Ardian Infrastructure, the letter of intent is not a counter-offer, but a way “to allow a negotiation to take place” and is dependent on an agreement between Veolia and SUEZ. 

Our 29.9% stake in SUEZ is not and will not be for sale: it constitutes the first step in the creation of a world champion of ecological transformation. 

With our irrevocable offer now on the table, it is time for the SUEZ board to consider it swiftly in accordance with its fiduciary duties and act in the interest of all shareholders by allowing them to have their say on our project during the next AGM.

Is the SUEZ board fulfilling its responsibilities to all shareholders?


To date, SUEZ’s board has made no attempt to stop the management team from multiplying onerous judicial litigations, poison pills such as the use of a Dutch Foundation to ring-fence SUEZ’s water assets (transferring control without a say or economic consideration for SUEZ shareholders). Nor have they encouraged SUEZ’s management team to engage with Veolia on the proposed merger or give SUEZ shareholders the opportunity to have their say on the transaction. 

SUEZ shareholders should ask if the current SUEZ board of directors represents the best interests of ALL shareholders. 

The SUEZ board has seen five of its board members resign in less than four months, a record in such a short timeframe, demonstrating the troubled atmosphere within the board at a critical crossroad for SUEZ and only a year after the launch of SUEZ’s unconvincing strategy Shaping 2030. 

Furthermore, these nominations by co-option (subject to the ratification by the next AGM), albeit authorized, should raise questions as the selected board members were not elected by shareholders, but chosen by a few board members to ring fence the board room. 

The current board is now composed of 14 members down from 15, with only one international appointment, yet non-independent, and no additional women. In addition, these decisions have a dramatic impact on the composition of the strategy committee, down from 7 members to 4 with only 2 independent members, down from 4.  These are facts. 

Taken together, these recent board changes demonstrate that corporate governance standards are declining at SUEZ, a worrying signal for shareholders. Shareholders should ask why critical strategic decisions that impact shareholder value are being made BEFORE they have the opportunity to vote on appointments that threaten the balance of the SUEZ board.

Can SUEZ use the Dutch-based foundation mechanism to transfer SUEZ’s Eau France and prevent the public offer from taking place?


Until the next AGM the Nanterre Commercial Court’s decision¹ prevents the board of SUEZ from transferring SUEZ Eau France into the Dutch-based foundation mechanism.

It is our legal position that this “poison pill” mechanism is illegal in France and violates laws designed to protect the interests of the shareholders. The Nanterre Commercial Court decided that decisions of this nature can only be made by SUEZ shareholders. While the Court’s decision prevents this self-destructive measure without shareholder approval, it’s clear that shareholders must act now to prevent further reckless acts such as key asset disposals.

Moreover, Veolia has initiated legal proceedings in order to have a final ruling that this Dutch-based foundation mechanism is illegal and void.

¹ The interim order dated November 19 prohibits SUEZ from taking any decision to render irrevocable the foreign inalienability mechanism of SUEZ Eau France, designed and implemented to prevent Veolia from carrying out its takeover project. This order is applicable until the end of any meeting of a future shareholders’ general assembly of SUEZ SA, called to rule on the said legal arrangement and its consequences, and at the latest until the shareholders’ Annual General Meeting called to rule on the financial statements for the year ended December 31, 2020.


Can shareholders do anything to ensure they get to consider the offer?


SUEZ’s shareholders can accelerate the deal timeline drastically by putting pressure on the SUEZ board to consider Veolia’s offer in accordance with its fiduciary duties with a view to negotiating and signing quickly a consolidation agreement. Given the SUEZ board’s stalling tactics, the next AGM is a critical moment for all stakeholders. By law, the AGM must be held, by the end of June 2021 at the latest. Given the actions of the SUEZ board – particularly in relation to the so-called “poison pill” - we believe the sooner it happens the better.

Why is it urgent for SUEZ shareholders to act now?


We have been transparent in our commitment to this merger and our industrial project from day one. Our determination to succeed is clear. However, should SUEZ’s management commit further acts of significant self-harm like the “poison pill” mechanism, then our offer will be affected, as contemplated in our draft information notice. 

The SUEZ board, and their onerous legal stalling tactics, is currently the only obstacle standing between SUEZ shareholders and Veolia’s offer.

A united business

What would be the key strengths of the combined entity?


Thanks to their complementary geographical footprints, the merger of Veolia and SUEZ would create a European headquartered global leader in water, waste and energy services with an unrivalled range of solutions and technologies.

The ecological transformation industry remains very fragmented. The global water market is valued at an estimated €625bn, while the waste market is valued at €360bn. Veolia is currently the world leader with a market share of 2 to 3% while Suez has about 2%. The consolidation of the sector has already begun, with the recent acquisitions including Urbaser by China Tianying. 

The combined Veolia SUEZ Group will be well-placed to face the challenges of financing the increasing research and development efforts essential to the development of new environmental technologies and raising of capital necessary to lead in high-growth areas such as hazardous waste treatment, the protection of water resources and solutions to support customers in meeting ever-increasing environmental standards.