Business

Veolia moves to sell SUEZ UK

Veolia has proposed the sale of SUEZ’s UK waste business in response to the Competition and Markets Authority's (CMA) probe into the merger of the two companies.

Veolia vehicleIn its provisional findings, the CMA ruled that the merge would ‘result in a substantial lessening of competition’, reducing options for local councils and businesses when procuring key waste and water management services. This, the CMA said, would lead to ‘more costly and lower quality services, and in turn, to higher council tax bills’.

Veolia has since announced ‘its intention to sell all of SUEZ's waste activities in [the UK]’, asserting that this ‘drastic decision’ is ‘an effective response to the intransigence of the CMA’.

In a statement, the waste management company stated that it ‘strongly disagrees’
with the CMA’s analysis of the concerned markets and ‘deplores the lack of shared understanding of the issues related to our sectors of activity’.

However, Veolia concluded that the sale would ‘free up significant cash flow to finance new developments, particularly in the energy sector, which will enable the company to return to a portfolio of activities balanced between water, energy and waste.’

The company added: “This divestment will also allow to accelerate the company's debt reduction, making Veolia more agile than ever as it approaches the end of Impact 2023. It will provide additional financial flexibility while Veolia embarks on a new strategic program placing innovation at the heart of its growth model.”

The merger agreement

Veolia originally announced its intention to acquire SUEZ in August 2020, reaching a merger agreement in April 2021. Veolia agreed to buy the 70.1 per cent of SUEZ it didn’t already own for €20.50 per share.

The agreement laid out what the ‘new SUEZ’ would look like under the Veolia umbrella, expected to be created with a revenue of around €7 billion. According to the document, the new SUEZ would be owned by a consortium of investors, composed of Meridiam, GIP, and CDC/CNP Assurances.

On May 14 2021, Veolia and SUEZ announced that they signed a combination agreement following approval by their respective Boards of Directors of the latest terms for their merger.

On 7 December 2021, the CMA expressed concerns for the Veolia and SUEZ merger in a public statement. The deal, the competitions body said, could lead to higher prices and lower quality services across ‘a range of waste management activities in the UK.’

However, on 15 December, the merger was approved by the European Commission, conditional on the basis of total compliance with a commitments package. The package was devised to eliminate the potential for competition concerns, which were originally raised with the initial announcement of the transaction.