Veolia and Suez reach merger agreement

Veolia and Suez have announced that their respective boards of directors have reached an agreement in principle on the key terms and conditions of a merger between the two groups.

The two French companies released a joint statement stating that Veolia has agreed to buy the 70.1 per cent of Suez it doesn’t already own for €20.50 per share.

Veolia’s acquisition of Suez will see the two groups merge, creating a global giant in waste and water services that the two companies have called a ‘global champion of ecological transformation’, with an annual revenue of around 37 billion euros.

The new agreement is expected to ease tensions that have built up throughout discussions that began in August 2020 when Veolia initially announced intentions to acquire Suez.

The two companies had previously failed to agree on the terms of the agreement, which previously saw Suez reject an offer from Veolia to buy at €18 per share.

Speaking after the agreement, Chairman of the Board of Directors of SUEZ Philippe Varin commented: "We have been calling for a negotiated solution for many weeks and today we have reached an agreement in principle that recognises the value of SUEZ.

“We will be vigilant to ensure that the conditions are met to reach a final agreement that will put an end to the conflict between our two companies and offer development prospects.”

The terms of the agreement state that a ‘new SUEZ’ will be created under the Veolia umbrella with a revenue of around €7 billion.

The new SUEZ is expected to be owned by a group of shareholders, including financial partners and employees, and will be majority French.

Its scope will be the municipal water and solid waste activities of SUEZ in France, as well as the activities of SUEZ in Italy, the Czech Republic, Africa, Central Asia, India, China and Australia.

If these terms of agreement are approved, this could see all Suez’s operations in the UK transferred to Veolia.

Chairman and Chief Executive Officer of Veolia Antoine Frérot added: "I am particularly pleased to announce today the conclusion of an agreement between Suez and Veolia that will enable the construction of the world champion of ecological transformation around Veolia, offering France a reference player in a sector that is probably the most important of this century.

"This agreement is beneficial for everyone: it guarantees the long-term future of Suez in France in a way that preserves competition, and it guarantees jobs.

“All stakeholders in both groups are therefore winners. The time for confrontation is over, the time for combination has begun."

Following the news of the agreement, shares of both Veolia and Suez have increased by as much as 8 per cent.

The next stage of the merger will see the two groups enter into definitive merger agreements, which is scheduled to begin before 14 May.