Marie Vernichon 

Three main actors 

Veolia, the “acquirer”

Long known as Générale des Eaux, it is the world leader in the sector. In addition to water and waste, the company specializes in the management of energy flows. Antoine Frérot, its CEO, heads a workforce of nearly 180,000 people worldwide. Caisse des Dépôts et Consignations, the French State, is its largest shareholder, with 5.7% of the capital.

Suez, the “target”.

When the two energy groups GDF and Suez merged in 2008, the water and waste activities of Suez were transferred to a subsidiary called Suez. In 2015, its parent company GDF Suez became Engie, this subsidiary is now the largest distributor of drinking water in the world, in terms of households distributed. Number 2 in environmental services, the company employs 90,000 people, is chaired by Philippe Varin and managed by Bertrand Camus.

Engie, the “seller”.

Engie has become GDF Suez competitor, a supplier of both gas and electricity. Engie is even one of the world’s leading non-oil energy providers. 23.6% owned by the French State and Engie holds 32% of Suez.

On Sunday August 30, Veolia announced its intention to acquire 29.9% of its major competitor Suez, thus relaunching an eight-year-old attempt to create a world leader in waste and water management services. This is the main part of the 32% that Engie owns in the sectors.

Veolia’s objective is to acquire all of its shares in order to merger the two companies. A potential full merger of Veolia and Suez would result in the emergence of a global firm with annual revenues of €40 bn.

The problem is that Suez does not look favorably on this takeover bid. The company is in the midst of a strategic plan and fears operational disruption due to the merger. It also declares a threat to employment, resulting from the synergies that are bound to be created. However, one should not underestimate the fool’s game that takes place to raise the stakes when this type of unsolicited bid falls.

Overview of the current market situation

The waste and water management market is a growing market. According to a study conducted by McKinsey & Company, the world increase in population, the number of cities and the GDP is creating a strong pressure on water supply and waste disposal. They predict that by 2030, the gap between water supply and demand could rise to 40% globally. Statista confirms this trend as you can see below:  

* Projection based on a CAGR of 5.8 percent between 2019 and 2024.


The market value by region is expected to increase worldwide. Thus, we can conclude that this is a market that should be sustained over time.

The waste and water management market is a particularly fragmented industry. Internationally, Veolia is positioned as a leader with market shares currently between 2 and 3%. The combined company with Suez would allow it to hold 5% of the market shares, which is equivalent to €1.4 trillion.

In the French water treatment market, three leaders have been identified, led by Veolia, followed by Suez and finally Saur. The combined market share of Suez and Veolia would account for more than 50% of the drinking water market and 44.3% of the wastewater market, with the remainder divided between a third player, Saur, and municipal authorities (when a local authority directly manages this activity).

Short resume of the battle 

On August 30, Veolia made an offer of €2.9 billion for a 29.9% stake in Suez to create a world leader in water, waste and energy.

On September 10, The Board of Directors of Suez rejected Veolia’s offer defending Suez’s independence. They consider Veolia’s hostile approach incompatible with the interests of the company and its stakeholders.

On September 17, Engie rejected Veolia’s offer for the capital of Suez. Engie wanted to obtain an improvement in the terms of Veolia’s offer, as well as additional assurances regarding the quality of Veolia’s project.

While the French State had declared that it did not want any conflict concerning the buyout, in the midst of an economic crisis following the effects of the Covid-19 pandemic.

On September 30, Engie accepted Veolia’s new offer for its 29.9% stake in the capital of Suez at €18 per share or €3.4 billion against an initial proposal of €15.5 per share or €2.9 billion.

The investment fund Ardian played the troublemaker on the morning of October 1st, offering Engie to buy 29.9% of Suez’s capital. This offer was unsurprisingly supported by the board of directors of the Suez group, which jumped at the opportunity to block the project of Antoine Frérot. But Engie let it be known that it was too late and Ardian finally withdrew its offer on the day of the 5th, when Veolia made its tempting €3.4 billion offer.

On October 5, Veolia announced that it had acquired 29.9% of the share capital of Suez from Engie and confirmed its intention to acquire control of the company.

This proposal presents in particular thefollowing items:

  • a price of 18 euros per share (coupon attached), i.e. a premium of 75% over the unaffected share price on July 30, 2020, paid immediately in cash;
  • the guarantee of 100% of the jobs and social benefits of all Suez employees in France;
  • the certainty of a Franco-French transaction;
  • the preservation of competition thanks to the takeover of Suez’s water business in France by the French company Meridiam, Meridiam having undertake

Why a 29,9% stake? A takeover bid for listed companies requires a lengthy mandatory procedure when it is a question of buying more than 30% of a company’s assets. In the interests of speed, Veolia initially offers to buy 29.9% of the shares of Suez.

Veolia does not intend to stop there. The group announces that on January 7, it sent to the Board of Directors of Suez the proposed public tender offer that it intends to file for the 70.1% of the share capital of Suez that it does not hold.

On October 6, Suez denounced an attempted “creeping takeover” by Veolia. The Engie subsidiary said it was using “all the means at its disposal” to protect the interests of its stakeholders and “avoid a creeping takeover or de facto control”.

On Sunday, February 7, Veolia announced the filing of a tender offer for the entire share capital of Suez, at a price of 18 euros per share. The same price at which the company had bought back 29.9% of its rival’s capital from Engie on October 5.

On Monday morning, however, Suez claimed that it had obtained an order from the Nanterre court requiring Veolia not to launch a public offer for its rival unless it was first approved by the target’s board of directors. Except that Veolia, for its part, stated that it had filed its offer with the Autorité des marchés financiers (AMF) at 7:00 a.m. before the court’s decision was communicated to it at 7:23 a.m. “Our offer is valid. Our offer is valid. It is gone,” replied Antoine Frérot, CEO of Veolia. In addition, on February 11, the Paris Court of Appeals dismissed Suez’s appeal and confirmed Veolia’s rights.

Suez announced on Friday, February 26, on the occasion of the publication of its 2020 results, the unanimous rejection by its Board of Directors of the offer to merger its historical rival Veolia. Suez states that 18 per share – paid in October 2020 to the energy company Engie for 29.9% of Suez’s capital – does not provide a “fair valuation of the company for its shareholders” or offer “the appropriate social guarantees to its employees”.

Last results 2020: Profits down, impacted by Covid crisis


In 2020, Veolia’s revenue was €26bn decreasing by -4.3% (-2.9% at constant exchange rates). The revenue was penalized in the first (-1.3%) and second quarters (-11.0%) by the confinements put in place as a result of the health crisis, then recovered in the third quarter (-0.6%) and returned to growth in the last quarter (+0.9%).

EBITDA decreases to €3.6bn (-9.5%; -7.1% at constant scope of consolidation and exchange rates), for an EBITDA margin of 14% (-0.8 percentage point). EBIT dropped to €1.3bn (-26.3%), and net profit to €89m (-85.8%).

At the end of December, the group had €5.8bn (-0.1%) cash and cash equivalents. Net financial debt amounted to €13.2 billion (vs. €10.7 billion in 2019). Excluding acquisitions in 2020,

Net Financial Debt decreased by €392m to €10,288m. Financial leverage stood at 3.2x at the end of December.

Outlooks: By 2021, the Group expects to offset the unfavorable effects of 2020 and expects to achieve strong growth in its results. Revenues are expected to be above the 2019 level. Cost savings of €350m are expected to be achieved: €250m under the recurring efficiency plan and €100m of additional one-off savings under the Recover & Adapt plan. EBITDA is expected to exceed €4bn, a growth of more than 10% compared to 2020. Net Financial Debt is expected to be below €12bn at the end of 2021 and leverage ratio below 3x.

Veolia proposes a dividend of €0.70 per share at the end of the 2020 exercise and aims to return to the pre-crisis distribution policy by 2021. In 2019, the dividend had increased by 8.7% to €1.00 per share.


In 2020, Suez’s revenue was €17.2bn decreasing by -4.5% (-2,8% at constant exchange rates).

EBIDTA declined to €2.8bn (-12.6%, -10.2% at constant exchange rates), for an EBITDA margin of 16.4% (-1.5 percentage point). EBIT fell to €780m (-44.6%). The group reports a net loss of -€228m (vs. €362m last year).

At the end of December, Suez’s net financial debt was reduced at 9.7bn (-4.0%) with a financial leverage at 3.5x (+0.3 percentage point).


For 2021, Suez is targeting revenues above €16bn with a return to organic growth, EBIT of €1.4 to €1.6bn, recurring EPS of €0.80 to €0.85 and recurring Free Cash Flow in excess of €500 million.


Together, Veolia and Suez would represent nearly €40bn in revenues and generate nearly €500m in operational synergies. The water sector accounts for 55% of Suez’s revenue and 41% of Veolia’s revenue. If the transaction is successful, some 4 to 5 billion assets should be sold, with a few other necessary divestments outside France. For the moment a friendly agreement seems unlikely. Suez’s Board of Directors believes that the takeover bid by its competitor Veolia is not acceptable, pointing out, among other things, the risk of dismantling and a price deemed insufficient. However, the CEO of Veolia states that its planned merger with Suez is “progressing exactly as [it had] wished” and continues to display unfailing optimism. All we can do is to follow the continuation of this water battle that seems far from over.



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