The alliance of Suez and Ardian paves the way for discussions with rival Veolia. The French branch of water management will be at the heart of the negotiations. With other affiliates involved.
It is a turning point in the battle between Veolia and Suez. Sunday evening, the French investment fund Ardian, associated with the American sovereign wealth fund GIP, finally came out of the woods by proposing a buyout of Suez at the same price as Veolia, i.e. 18 euros per share, valuing the group at more than 11 Billions of Euro’s. Its intention was immediately supported by the board of directors of Suez, which declared, for the first time to “open the dialogue with Veolia”. According to our information, the president of Suez, Philippe Varin, as well as the managing director, Bertrand Camus, went to present this project to the Minister of the Economy Bruno Le Maire, last Monday. Bertrand Camus also called Veolia CEO Antoine Frérot on Sunday evening to inform him of Suez’s support for the Ardian project.
For its part, Veolia clarified that it was not “seller” of its 29.9% stake in Suez, closing the door to a takeover bid from Ardian, in which nobody actually believes. But “we are ready to discuss our project” specifies a source close to Veolia to BFM Business. The Ardian ally allows Suez to start more balanced negotiations with Veolia, which is its largest shareholder.
Caisse des Dépôts ready to intervene
In the middle of the battlefield, the Ardian fund tries to play the blue helmets. “For the first time, the two groups are ready to discuss, welcomes a close to the fund. We will intervene only if the two groups find an agreement.” According to our information, Ardian also aims to invite other French institutional investors in turn. At the beginning of January, the managing director of Caisse des Dépôts, Eric Lombard told BFM Business that “if our intervention can help a solution between the two groups, we will be present”.
What is the possible common ground between Suez and Veolia? Everything revolves around the Suez Eau France subsidiary that Veolia will not be able to keep anyway for reasons of competition. Veolia plans to sell it back to the Meridiam fund, but for Suez, this is out of the question. The group hopes to keep this branch, reinforced by several companies around, with the Ardian fund as owner. At the beginning of January, the CEO of Veolia, Antoine Frérot, confided that he was not opposed to it on condition that Ardian make the same commitments, notably social, as the Meridiam fund.
The United States, Morocco and Spain in the balance
At the end of September, when Engie was in the process of selling its 30% stake to Veolia, the three groups had started a discussion around this “little Suez”. Veolia had agreed to leave Suez activities weighing 5 billion euros in turnover, twice as much as the only French subsidiary in water. “It’s always the same idea: Suez wants to keep more activities than Suez Eau France and Ardian hopes to recover them”, explains a source familiar with the matter.
According to our information, Veolia was ready to leave to Suez the subsidiary in Morocco and especially the American branch dedicated to water management for manufacturers. This company bought in 2017 from General Electric, known as “GE Water” is essential for Suez and Ardian because it gives it access to the American market and has good growth prospects.
Meridiam the big loser
Ardian hopes for its part to recover one of the Suez subsidiaries in Spain, Chile or the United States. The Spanish “Agbar”, which Suez has been considering selling for two years, could be in the bride’s basket. The more so as the managing director Bertrand Camus was ready to sell it last year but the president of Suez at the time, Jean-Louis Chaussade was opposed to it. On the other hand, he seems attached to the American subsidiary “GE Water” for having overseen its takeover while he was managing the United States zone of Suez.
The two groups still have four months to reach an agreement, before the next general assembly of Suez which is to be held in June. If an agreement is successful between Veolia, Suez and Ardian, it is de facto the Meridiam fund which was originally to buy out the Suez Eau France subsidiary, which will be expelled from the operation. And the big loser of this battle.
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