(Bloomberg) — Suez SA Chief Executive Officer Bertrand Camus rebuffed a takeover approach by Veolia Environnement SA aimed at building a French environmental-services giant, saying it undervalues the company and risks running into antitrust obstacles.
Veolia offered last week to buy a 29.9% stake in Suez from Engie SA, the first step toward a full takeover to create a water and waste-treatment company with more than 40 billion euros ($47 billion) in revenue. Veolia said the 2.9 billion-euro offer is part of a strategy to fend off Chinese competition.
After Engie Chairman Jean-Pierre Clamadieu called Veolia’s offer too low and urged both parties to hold talks, Camus portrayed the project as an absurdity and suggested Suez is working on alternatives. He expressed confidence that he’ll find buyers for Engie’s stake.
“The proposed deal by Veolia is an aberration and destructive for France,” Camus said in an interview with Le Figaro published Sunday. “Regarding the purchase of the Engie stake, we have scenarios in the works.”
The offer “undervalues Suez’s assets” and is opportunistic because the company’s shares have been hurt by the coronavirus pandemic, masking the success of its turnaround plan, Camus told Le Figaro. “This project completely underestimates competition issues and execution risks.”
Global warming and pollution are boosting the need to recycle resources and treat hazardous products. Camus said Veolia and Suez have strong positions in cities in Morocco and China, but that China’s government wouldn’t approve a project presented as a response to Chinese competition. France would end up with a weakened player if the merger were to proceed, he said.
To head off antitrust concerns, Veolia said French investment fund Meridiam has agreed to buy Suez’s French water business. Other areas of competition include some waste management activities in France and a handful of cases outside France, according to Veolia.
Camus also dismissed that maneuver, saying the French water business would stagnate because it would be separated from the benefits of synergy and innovation it enjoys as a part of Suez.
Government’s Stance
Veolia offered to buy most of Engie’s 32% stake in Suez for 15.5 euros per share on Aug. 31. Camus told Le Figaro that he’s seeking an “alternative solution” that isn’t limited to finding only French shareholders.
All potential offers “will be considered with the same fairness,” French Finance Minister Bruno Le Maire said Sunday on Europe 1 radio and Cnews television.
“Whatever the offer,” the government wants “a shareholdership that’s French in majority,” which is the case with Veolia, he said.
The French government, which owns 24% of Engie, will make the preservation of jobs at Suez and its French industrial footprint the top priority, Le Maire reiterated.
Asked about Veolia’s offer for the Suez stake owned by Engie and its pledge to preserve French jobs, Le Maire said “any offer can always be improved.”
(Updates with additional Suez CEO comments on proposed deal.)
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