To buy out its rival Suez and become the “super champion of environmental services” that it aspires to, Veolia will still have to overcome obstacles in a booming and increasingly competitive global market.
What goals in this marriage?
Against a backdrop of global warming and growing environmental concerns, Veolia sees demand growing, whether for water, waste treatment or energy management.
In total, a sector worth 1,400 billion euros annually.
"The pressure of public opinion, the European Green Deal and the recovery plans that are announced in many countries make ecological ambition a necessity. This project will allow us to complement the solutions we provide to public actors and private ", explains its CEO Antoine Frérot.
"Size is strength", he argues, to develop "innovations. For example carbon capture to reseed the soil, recycling waste such as polystyrene".
Veolia argues that the takeover of Suez would also make it possible to achieve € 500 million annually in synergies: real estate, purchases, internalization of services, etc.
A future global juggernaut?
With this marriage, Veolia would realize an old dream, the object of recurring speculation, and would create a unique brand, weighing more than 40 billion euros in turnover today.
Together, Veolia and Suez, world number one and two in their sector, represent less than 5% of the world market, divided into a myriad of international players.
But "there is a beginning of concentration", warns Veolia, and "the investment funds spotted it the first".
Mr. Frérot also notes the rise of Chinese groups, in particular "Beijing Group, which will be our major global competitor".
Will Engie sell its shares?
To swallow Suez, Veolia wants to start with the repurchase of almost all the shares of Engie, the main shareholder, before, in a second step, to launch a takeover bid for the other shareholders.
Antoine Frérot sent Engie on Sunday a firm proposal of 2.9 billion euros for 29.9% of Suez.
A cash offer, at 15.50 euros per share, or 50% more than the price of Suez in July.
For Xavier Regnard, analyst at Bryan Garnier, Engie should have a hard time refusing the proposal: "it's a good opportunity, the price is + fair + (just Editor's note), the subject of its participation in Suez has dragged on for a long time."
Engie has a month to respond.
The State, its reference shareholder, will have a say, depending on "the quality of the industrial project, the maintenance of a plurality of actors in the services to local communities", said the Minister of the Economy Bruno Le Maire.
Is Suez ready?
During a press point on Monday, Mr. Frérot called on "all the teams (from Suez) including its top management to join us on this great challenge".
Voting their "common professional culture", he displayed his confidence and hoped to complete the operation within some 18 months.
But after a meeting of its board of directors on Monday, Suez pointed to an "unsolicited approach" and the "great uncertainties" that the operation would entail.
He also highlights "the complexity of the process selected", which according to him "would lead to two years of operational disruptions", and mentions "concerns about the future of water treatment and distribution activities in France, and on employment with regard to the amount of synergies expected ".
Suez employs around 90,000 people on five continents, a third of whom are in France, and Veolia nearly 180,000.
What other obstacles to anticipate?
The operation will be scrutinized by antitrust legislation, a subject that had already blocked discussions in 2012.
This competition problem weighs especially in France, judge Veolia, who has taken the lead in finding a buyer for Suez's water activities: the company Meridiam.
For waste, the group is waiting to discuss with the Competition Authority.
On Monday, two NGOs - the Republican Front for Intervention Against Corruption (Fricc) and the Association for the Global Water Contract (Acme) - announced that they were seizing the Competition Authority and the European Commission to oppose the project, which would lead according to them to "a monopoly in public water, sanitation, waste and energy", not to mention "a huge risk" for the employees of the two groups.
For its part, the State warned that it would be vigilant on the employment commitments made by Veolia, which assured that the operation would have "no negative impact" in France.
© 2020 AFP