Veolia' Hostile Bid to Takeover Suez for $23.1 billion

Acquisition Overview

On October 5th, 2020, Veolia announced that it acquired 29.9% stake in Suez from Engie, the biggest shareholder of Suez, with €18 per share and confirmed its further intention to publicly takeover Suez. The announcement was after Veolia’s first proposal on 30/08/2020 with €15.5 per share. The transaction between Veolia and Engie was strongly disagreed by the board of Suez as Veolia is a major rival in the French water and waste management industry.

Basic information of the two companies is listed as follows:

Veolia Environnement Overview

Veolia Environnement S.A. is a French optimized resource management company with three main services: water management, waste management and energy services. By far, it has 171,000 employees worldwide across 48 countries.

Suez Overview

Suez is a French-based global expert in water and waste management for 160 years, operating across 5 continents. In 2008, Engie SA was formed by the merger between Gaz de France and Suez, after which Engie held around 32% stock of Suez. The

Industry Insight

According to Allied Market Research, the size of the global waste management industry in 2019 was $2080 billion, projected to increase to $2,339.8 billion by 2027, representing a CAGR of 5.5%. The global transaction volume in the water resources industry in 2020 was around $11.8 billion, primarily motivated by high-profile transactions in EMEA and APAC. Private equity firms have also become more interested in the water resources industry following the ESG investing trend and governmental commitments to waste management. On 9 July 2020, KKR & Co acquired Viridor for £4.2 billion, a recycling and renewable energy company based in the UK. Following the transaction, KKR & Co continues its expansion into the waste management industry. On 7 August 2020, it purchased 16.7% stake in TSK Corporation, a Korean water treatment company.

Additionally, the waste management industry has been relatively resilient during the pandemic. Although most companies experienced declines in their revenue, with commercial waste volume down roughly by 15% to 25% due to the closure of restaurants and other business establishments, residential wastes increased substantially driven by the “working from home” mode. The industry was able to maintain strong cash flows and provide dividends to shareholders.

To read the full report, visit https://www.manda-discovery.com/blog and have access to:

- Diversification & Scale Opportunities

- Industry Overview

- Cost Synergies

- Long term prospects

Written by Qizhe Cui (Imperial College London)