End of the first act. Against and against the advice of the managers of Suez, Engie, a 29.9% shareholder in the French number two in water and waste, finally agreed Monday evening to sell its stake to Veolia for 18 euros per share, i.e. total sum of 3.4 billion euros. This is the prelude to a larger-scale operation in which Veolia, the French number one in water distribution and waste treatment, intends to buy 100% of the capital of Suez, number two in France in the same business sector. A deal worth 10 billion euros, which if completed, will see the dream of Veolia CEO Antoine Frérot come true: to build a world champion in water and waste management.
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Still considered “hostile” by Suez, which has tried everything to escape the clutches of Veolia, the operation was not carried out in the greatest serenity. During the board of directors of Engie this Monday evening, the representative of the State voted against this sale. However, the State is a shareholder in Engie with 23.6% of the capital, which should normally give it a voice in the chapter. Unusually, Bercy was also keen to immediately let it be known how his representative voted. History to clearly show its disagreement, especially when the social commitments of the purchaser of Suez and on which the State would have liked to have more guarantees. Suez unions are indeed expecting more than 4,000 job cuts in France after the merger. Bercy should also closely monitor the promise made by Antoine Frerot, CEO of Veolia, not to proceed with layoffs in France until 2e semester 2023.
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However, this passage in force of Engie, in spite of the opposition of its reference shareholder, is a first. Suez is unlikely to miss this opportunity to use this unprecedented situation. In particular to fight against the takeover bid from Veolia, which will now follow on the 70% of the remaining capital of Suez. For proof, and according to information from Release, a particularly salty letter from the president of Suez, Philippe Varin, was sent Monday afternoon to the Minister of the Economy, Bruno Le Maire. She evokes “several serious anomalies “ in the process of selling Veolia’s stake in Suez. The letter in question asks the question of “loyalty “ by Engie “reference shareholder of Suez ” and “reserves the right to take legal action against it “.
A second season will therefore begin in this industrial and financial soap opera for which, from now on, two scenarios are possible. Veolia and Suez eventually come to an agreement in which Véolia’s assets are sold in sufficient quantity to Suez to enable it to continue an activity in a somewhat independent manner. Another hypothesis is that the situation continues to deteriorate between the two companies. At that time, law firms will show all their creativity to launch litigation on all fronts and before all courts. In this case, the poison pill imagined by Suez to thwart the sale of its activities in France by Veolia, would become active. In this case, a foundation under non-transferable Dutch law in which the activities of Suez in France are controlled.
This arrangement effectively prevents Veolia, if it takes control of Suez, from reselling its subsidiaries, which represent nearly two billion euros in turnover. A new fight is now in danger of shaking French capitalism and by extension the state and it may only be beginning. Because the case has become political: on the left Jean-Luc Mélenchon and Arnaud Montebourg have already stepped up to the plate against this takeover bid from Veolia on Suez which threatens employment and worries local elected officials who fear an increase in the cost of community services. The affair even agitates the ranks of the majority: forty LREM deputies led by Pierre Person asked the government to intervene to prevent this “forced marriage”. The Suez unions have already decided to take the case to court and want to seize the National Financial Prosecutor’s Office (PNF) on the opaque conditions of this raid carried out by Veolia on its competitor Suez.