On D-1, Suez opposes a final disqualification from Veolia

No truce in the soap opera of the sale of 29.9% of the capital of Suez by its shareholder Engie. On the eve of a decisive advice from Engie who has to vote on Monday on the offer to 3.4 billion euros filed by Veolia (the former Générale des Eaux), to buy its competitor Suez (formerly Lyonnaise des Eaux), the two parties are firmly in place. While Veolia spoke this Sunday morning of “Constructive discussions” to buy out its lifelong competitor and persisted in presenting its offer as “Friendly”, a board of directors of Suez met at the same time. On the agenda, the result of a week of negotiations as discreet as they were tense between Antoine Frérot, CEO of Veolia, Philippe Varin, president of Suez, and Jean-Pierre Clamadieu, president of Engie. The buyer, the one who does not want to be redeemed and the seller around the same table. But despite a dinner organized Thursday at the headquarters of Engie, the three protagonists have not found common ground after a month of high-profile fight, rich in invectives and twisted blows.

At the end of Suez’s board of directors this Sunday, its chairman Philippe Varin sent a letter to the boss of Veolia, Antoine Frérot. Missive including Release was able to take notice. The text is as short as it is unambiguous. The author of the letter notes that “Suez has shown good will and has spared no effort in finding a solution acceptable to all ”. However, he considers that “lThe proposals made do not take up the industrial objective ”. This is why Philippe Varin believes that “The proposed transaction, in particular the first step in the purchase of the 29.9% block of Suez shares by Engie, remains hostile.” A firm and apparently final inadmissibility to Veolia, which provided the same morning by means of a press release “Unconditionally undertake not to file a hostile takeover bid following the sale of the shares held by Engie in Suez”.

The “poison pill” is still there

We could not be clearer. Suez therefore reaffirms its refusal to see its main competitor in water and waste get its hands on 29.9% of its capital for 3.4 billion euros, before launching a takeover bid (takeover bid) on the remaining 70% in a second step for a little more than 10 billion in total. This “Niet” has at least two direct consequences. First, put the State shareholder of Engie (23.6% of the capital) in a delicate position. Bruno Le Maire, the Minister of the Economy, wanted at all costs to avoid a battle of ragpickers between the two French heavyweights of water and waste. Suez and Veolia are two world-famous companies. Then if the operation is qualified as “unfriendly”, this means that Suez will not dissolve the poison pill that he made last week to put a damper on Veolia. Namely, a foundation under Dutch law in which the control of Suez’s activities in France was housed. This legal system has the effect of making non-transferable all Suez subsidiaries that distribute water in France. It is precisely these activities that Veolia wanted to sell to the investment fund Meridiam in order to avoid finding itself in a dominant position. A situation that would inevitably be sanctioned by the Competition Authority since Veolia is already the number one in water distribution in France.

This Monday, the seller Engie must therefore meet his board of directors, with the high probability that he will be tempted to sell to Veolia the 30% of Suez that he holds. Until then, an alternative takeover proposal could emerge of the French investment fund Ardian, the “white knight” that Suez called to the rescue. Ardian has the support of unions and employee shareholders of Suez. In a press release published on Sunday, the Suez inter-union, which plans to take the case to court, announces that it “will fight until the withdrawal of Veolia’s offer ”: she believes that it is necessary «Stopper l’OPA de Veolia» to avoid “The assassination of an industrial flagship” and supports the “white knight” Ardian. The employee shareholders of Suez (4% of the capital) are in the same position. And they received at the end of the week the reinforcement of two tenors of the left, Jean-Luc Mélenchon and Arnaud Montebourg.

Mélenchon and Montebourg get involved

The leader of the rebels estimated in the columns of Release what “Water is a common good” and “Should not be the object of a war between private shareholders”. The second wrote to him on October 2 an inflammatory letter to Prime Minister Jean Castex, whose existence was revealed by Libé, to say all the bad things he thinks about “Forced sale” from Suez to Veolia: “How can the government that you lead allow such an important and robust company as Suez to be dismantled ”, thundered the former socialist Minister of Productive Recovery when he saw the hand “oligarchic” d’Emmanuel Macron.

Côté En Marche, not everyone sees this operation in a good light either: in a letter sent on October 3 to the Minister of the Economy, Bruno Le Maire, the LREM deputy of Paris Pierre Person, supported by about forty of his colleagues, expresses a lively “worry” before the turn of events: “If the merger were to take place, it would be more of a forced marriage than a real merger wanted by the stakeholders”, he writes. Faced with the risk of job destruction, quantified by the unions “5,000 in France and 10,000 worldwide out of the 90,000 employees in Suez ”, Person asks the Mayor to “Give time to time”. That of allowing Ardian to finalize its counter-offer which would allow Suez to maintain its independence. And that of a “Parliamentary control mission on the consequences of this merger on the common goods”. On the right, several LR deputies are in the same position.

Unions want to go to court

In short, the case becomes politicized in the home straight at the risk of embarrassing the government. All the more so as the inter-union of Suez (CFE-CGC, CFDT, CFTC, CGT and FO) threatens from Monday to “Seize the judicial authorities and in particular the National Financial Prosecutor’s Office to report their serious questions or even their suspicions about the lawful nature of the operation”.

Unless there is a final new deadline granted by Engie to the Suez camp, however, the time seems extremely short for this Ardian counter-offer to be completely tied up, while the one submitted by Veolia to 3.4 billion euros, all very firm, valid until midnight Monday. Seller Engie warned on Sunday that he would not consider “An alternative offer” for its shares in Suez “Only if it is a firm offer and at a price at least equal to that of Veolia”. But this water fight has already reserved more than one twist for its spectators.

Jean-Christophe Féraud


Franck Bouaziz


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