Veolia Aims to Create “French world champion in ecological transformation”

Veolia Puts in Acquisition Bid for Fellow French Waste & Recycling Giant SUEZ

Veolia has made a firm offer to French gas and power utility Engie for the acquisition of 29.9% of the Suez shares. Both firms operate hundreds of recycling, biowaste, biogas, waste to energy and landfill operations around the world.

All of Suez's French water activities, as well as the engineering and R&D teams related to this division, would be acquired by this long-term French buyer. Meridiam, a benefit corporation, is a world leader in investment and infrastructure management for public services that would provide Suez Eau France with access to the financial resources it needs to realize its growth potential and industrial ambition.

In addition, the other identified areas of competition would concern certain waste management activities in France and a very few cases outside France.

A strong strategic rationale based on five pillars

By combining the very solid skills of Suez and Veolia, this transaction would be able to significantly accelerate the development of the new entity in the face of growing competition, and would enable the industry in France, Europe and the world to meet the environmental challenges of the 21st century.

● Broader expertise and an enlarged commercial offer

The two companies, which share a common nationality, corporate culture and know-how, are also complementary in water treatment and distribution, waste collection and recovery, particularly hazardous and toxic waste, plastics recycling, soil remediation, air quality and optimization of energy consumption. All these skills, brought together under the same brand name and supported by a team united by the same values, provide a complete range of solutions at a time when public authorities and industrial clients alike are seeking to make their activities cleaner, more efficient and more virtuous.

● An increased capacity for innovation

In a particularly fragmented volume market, innovation is fundamental to inventing and developing the technologies that are still missing to fully succeed in the ecological transformation. The combination of talent and research skills would accelerate the development of these forward-looking solutions and enable a better return on the necessary investments.

This enhanced capacity for innovation would also be supported in particular by French small and medium-sized companies working on innovation in the major areas of ecological transformation, through a support fund set up by the new entity.

In addition, the operation would lead to the establishment of a new professional training center, providing all the necessary levels of skills for the new professions that will be created by the ecological transformation, and thus launch a dedicated European school of ecological transformation in France.

● Strengthened geographical positions

Both because of the complementary nature of Suez's and Veolia's different geographies, but also by consolidating the key geographies in which the two groups operate, the new group's international footprint would be strengthened, with a significantly increased share of the world's fast-growing regions.

Veolia is particularly well established in Central and Eastern Europe and the United Kingdom, while Suez's historical geographies are in Spain and Northern Europe. Outside Europe, where the main growth regions for our businesses are located, the company would double in size in South America and Australia, while significantly strengthening its positions in North America and Asia.

● A natural combination of forces

The sale by Engie of its stake in Suez would take place at the ideal time to complete this combination: the reorganizations carried out in recent years by the two groups make them more compatible and complementary than ever. Indeed, their new strategic plans, Shaping 2030 for Suez and Impact 2023 for Veolia, are convergent and both clearly oriented towards international markets with high growth and innovation potential.

● A transaction that creates value for all stakeholders

For employees, this new, more innovative and international entity would offer even more perspectives and opportunities. The transaction would be carried out without any negative impact on employment in France. In addition, all customers, local authorities and industrial clients, would find in this new entity a partner that would enable them to achieve their own ecological transformation objectives much more quickly.

Finally, this transaction would create value for Veolia shareholders from the very first year, thanks in particular to operating and purchasing synergies estimated at 500 million euros, which have been taken into account in the price offered to Engie.

This exciting project would be fully in line with Veolia's corporate purpose, and would ideally position the new entity to meet the main challenge of this century: ecological transformation.

Messier Maris & Associés, and Perella Weinberg Partners are acting as financial advisers to Veolia for this transaction, Cleary Gottlieb Steen & Hamilton LL.P., Professor Xavier Boucobza, Me. Patrice Gassenbach, Peltier Juvigny Marpeau & Associés and Hogan Lovells, Flichy Grangé Avocats as legal advice. Citi and Gide are the financial and legal advisers of the board of directors.