Suez Shares Jump As Veolia Plans EUR2.9 Billion Stake Purchase, Eyes Takeover

By Giulia Petroni

French water and waste management company Suez SA's shares jumped on Monday after Veolia Environnement SA made a cash offer to acquire a 29.9% stake in the company for 2.91 billion euros ($3.45 billion) as a step toward a potential takeover.

Veolia said Sunday that it is offering to buy the stake from energy company Engie SA in Suez at a price of EUR15.50 a share in cash. If the offer is accepted, Veolia would formally bid for the remaining shares in its utility rival.

At 0811 GMT, Suez traded 19% higher at EUR14.57 a share. Veolia's shares traded 3.3% higher.

Suez said the approach wasn't solicited and it will convene its board to discuss the approach. Engie owned a 32.1% stake in Suez as of the end of 2019. Other major investors include the investment company of Spain's La Caixa banking foundation.

Engie shares rose 5.6% to EUR11.76.

"The offer is surprising since it is not in line with the strategic plan/M&A strategy presented by Veolia in late February," says Bryan Garnier. "We understand the rationale behind creating a global champion with multiple synergies but a lot of work needs to be done [in terms of] antitrust, financing, integration etc."

Veolia said if it acquired Suez it would sell off its French water arm Meridiam, and has already identified an acquirer. It estimate the possible cost savings to be achieved from the combination at EUR500 million.

"This historic opportunity will enable us to build the French world champion in ecological transformation, while accelerating international development and strengthening the new entity's capacity for innovation. This project is part of a friendly approach, as we share the same businesses, corporate culture and values with Suez," Veolia Chief Executive Antoine Frerot said.

Write to Giulia Petroni at giulia.petroni@wsj.com

(END) Dow Jones Newswires

August 31, 2020 04:38 ET (08:38 GMT)

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