Veolia wants to swallow Suez: a Franco-French battle for the global market

Audio 03:39

Logos of the French companies Véolia and Suez.

REUTERS / Charles Platiau

By: Dominique Baillard Follow

8 min

The French Veolia, the world number one in water and waste, will know in the coming hours if he manages to engulf the number 2, Suez, another French champion in the sector.

The takeover offer he made to the main shareholder, Engie, expires this Monday evening at midnight.

The challenge: the global water and waste market.

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A field that the two French giants know well since it is outside of France that they already achieve most of their turnover.

In Europe, their biggest market by far, they are complementary: Veolia has a strong presence in the east and Suez in the south.

And there is enough to satisfy their thirst for expansion in the rest of the world because the prospects are immense: the market for environmental services is estimated at 1400 billion euros per year.

Two billion earthlings still do not have drinking water at home.

An example: Brazil.

It is passing a law opening up water and sanitation management to private companies, hoping to bring these services to half of Brazilians who still lack them.

So far neither is rushing.

The management of water by delegation to a private company, a model invented in France in the 19th century by these two twin companies, has become risky, because it is very dependent on the goodwill of politicians.

Veolia and Suez prefer to look at industrial needs, the demand from these regular and greedy customers has exploded for ten years.

The water and waste market is also driven by the ecological transition

These water experts are called upon all over the world to find technical solutions to water stress, in 2030 one in two people will live in an affected area, already one in three countries is affected in Europe.

Among the avenues there is water desalination, still an industrial niche but in full swing.

Another example of a booming market is that of wastewater.

Of which only 5% are recycled.

Smart grids and the circular economy are now the priority of these manufacturers, in countries already well served by water.

Defenders of Suez believe that the merger does not really strengthen them in international competition since together they will weigh only 3% of the world market.

The sector is still very fragmented with a multitude of local players.

Given the demand for technological innovation, Antoine Frérot, the boss of Veolia believes on the contrary that the two groups need to unite to resist against new Chinese competitors.

As in railways and aeronautics, Beijing has an international ambition in this area.

Veolia's Chinese partner, Beijing capital group has already acquired a New Zealand player and has a project in Poland

Are the two French champions directly threatened by these Chinese companies?

Veolia considers that this partner will soon be one of its direct competitors.

The world's number three in water is Chinese: Beijing enterprise Water Group is still three times smaller than Veolia, twice smaller than Suez, but it has already shown its appetite for international markets by buying a German company specializing in methanization of waste.

While waiting for the great world naval battle, it is in the Franco-French backwater that the operation could get bogged down.

Veolia holds 40% of the French market, Suez 20% and there is no question for him to get rid of this historic nugget.

►

In France cosmetics sales fell 10% during the first six months of the year

A reflux to put into perspective.

Over the year, the decline could be limited to 5%.

The increase in demand for hygiene products will limit very significant losses on beauty products.

Exports are also at half mast.

SMEs suffer the most, some have lost more than half of their turnover, it is these companies that need active support to prepare for the market recovery expected not before 2022.

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