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March 24, 2021

Unpicking SUEZ’s misleading “new offer”

Unpicking SUEZ’s misleading “new offer”

SUEZ has once again issued biased information designed to mask the true objectives of its board, who continues to favour the interests of a third-party consortium rather than the interests of its own stakeholders.

The only offer on the table is Veolia’s, filed with the AMF on 8 February 2021. Veolia’s offer has been consistent and straightforward from the start, following the regulatory process while ensuring that all SUEZ stakeholders are informed fairly and transparently.

The SUEZ leadership team is looking only to favour itself and its financial backers rather than protect its assets, its employees, its clients and its shareholders.

This could have been the start of a constructive dialogue given the real and evidenced offer from Veolia, in particular following Veolia’s initiative to safeguard SUEZ France waste and water assets. Therefore, the “solution” suggested by the consortium and the board of SUEZ can’t form the right basis of discussion given its sole purpose is cherry-picking in order to withhold much more than a half of the EV while ignoring the material implications of such choices on the perimeter, the synergies and, lastly, the price. Furthermore, nobody knows exactly which assets are affected by the proposed solution!

It is disturbing that the SUEZ board is focussed neither on defending the interest of the company and all stakeholders, nor on delivering maximum value for shareholders via dialogue, but rather acting to dismantle the group in the most destructive way. 

Terms, perimeter and ultimately price all go hand in hand, but for Veolia, its entire project relies on a thought through industrial rationale capable of creating unique operational and development synergies. These synergies are currently endangered by the board of SUEZ decisions. 

Shareholders could then wonder what this “solution” is – as we do, since it raises more questions than answers. Here we outline some of the key concerns SUEZ shareholders should have with these latest developments:


In its statement on Sunday 21st March, SUEZ implies that the GIP and Ardian consortium has made a “firm and fully funded” offer at €20 per share. This is simply not the case and no such offer for the entire SUEZ business exists.

   - The “offer”” announced does not cover SUEZ as a whole (as with Veolia’s offer).

   - In fact - Ardian's press release is explicit about this in a way that SUEZ’s statement is not: "the project carried out by the consortium, which assumes an agreement between SUEZ and Veolia on the terms of Veolia's public offer, does not constitute a public offer in competition with that filed by Veolia."

   - The €20 per share presented does not correspond in any way to a price or value that the Consortium is ready to pay to Suez shareholders. It is created by mechanically applying the implied multiple of 9.1x calculated by the Consortium to SUEZ as a whole, not taking into account that Ardian and GIP derive the EV of SUEZ and this multiple by cherry picking the most valuable assets for themselves, ignoring all other assets.

   - And while SUEZ mentions the consortium possibly presenting a competing offer should Veolia withdraw, it is fully subject to a number of conditions and approvals as well as the ability to finance the offer which is not confirmed. Again – unlike Veolia.

The “solution” proposed, is conditional on an agreement with Veolia, SUEZ’s largest shareholder. Veolia will never agree to a perimeter transferring the majority of the business to the Ardian / GIP consortium leaving Veolia with lower margin assets and most of the debt.

   - The perimeter proposed clearly would lead to splitting the group in a completely inequitable way that is clearly unacceptable for Veolia.

   - Post public offer, the consortium would receive a sum of assets generating €9.1 billion in revenue, more than 2/3 of existing water assets (highly valued by financial markets); or 55% of the total and 57% of the margin for the consortium.

   - This would leave Veolia with a business of around €7.6 billion in revenues, almost exclusively focused on waste i.e. 45% of the total and 43% of the margin, bearing most of the debt and all the carve out costs and taxes to pay.

   - Conceding certain international water activities, identified as strategic since the start, would be contrary to Veolia’s offer and would have a significant impact on industrial synergies given the high level of complementary which is at the heart of Veolia’s initial project.

The foundation – once presented as a defence mechanism to preserve SUEZ Eau France within the group and its social interests, is now being weaponised to serve the business on a plate to Ardian and GIP. It has also now been made irreversible without shareholder approval.

   - The foundation-based device, initially justified by SUEZ to preserve the activity of SUEZ Eau France, has now completely changed its object.

   - Both in Veolia's offer and in the Consortium's proposal, SUEZ Eau France will be sold. 

   - In Veolia’s tender offer, SUEZ’s French water and waste activities, as well as its engineering-construction, digital and research activities, would remain part of a single entity supported by a leading long-term investor Meridiam, the reputable French infrastructure management company.

   - SUEZ now claims it is “protecting the Group's corporate interest and finding a balance for the benefit of all stakeholders by making the mechanism final until September 2024.”. The statement directly references it as a sole defence tactic against Veolia.

   - The board confirms their ability to deactivate the foundation as and when they see fit between now and the 20 April, favouring publicly the transfer to this consortium but to no other third party. Where is the corporate interest of SUEZ in this mechanism?

   - In this new context, the foundation’s mechanism raises questions with regard to the principles of stock market law. Its purpose, by means of a unilateral and discretionary decision by SUEZ, is to force Veolia to accept a solution that dismantles SUEZ for the benefit of a new SUEZ and favours the current management of the company and its financial backers.

This offer, insofar as it constitutes a dismantling of half of the company, must be submitted for shareholder approval at the AGM. GIP / Ardian honestly address this point in their press release while SUEZ conceals it in the appendix.

   - Once again, SUEZ leadership team is using ambiguity in its public communications to mask its real objectives by claiming to act in the interest of stakeholders.

   - Shareholders are not duped and several have clearly indicated to the market they do not believe in this “solution” given the lack of room to manoeuvre to reach a long awaited agreement with Veolia.

   - These worrying corporate governance standards should alert shareholders to take action now. Legal actions assessing the individual responsibility of the directors are being envisaged.

   - Veolia remains resolute in its plan to create a global champion of ecological transformation and confirms its offer is irrevocable and continues to run its course (6 to 11 months before completion).

   - It is in the interest of SUEZ shareholders to act to deactivate the foundation, the main obstacle to decide on the only offer on the table, and prevent any further value destruction.

Now more than ever, SUEZ shareholders make yourself heard.