(Bloomberg) — Suez SA backed a potential takeover bid led by private equity firm Ardian SAS, seeking to give investors an alternative as it fights an acquisition from French rival Veolia Environnement SA.
Ardian’s project, which has has yet be detailed, is “in the interest of Suez — its shareholders, its employees, its clients and all its stakeholders,” the water and waste-treatment company said in a statement on Sunday after the board reviewed the plan. The Ardian proposal is “built around growth,” and would allow for an employees’ shareholding to double, it added.
Suez said earlier Sunday it still considers Veolia’s approach to be hostile, adding further tension to a multi-stranded saga that’s drawn in the French government, and damping hopes that recent discussions could pave the way for a friendly tie-up between the two French giants.
Veolia’s offer to buy a 29.9% stake in Suez from French energy utility Engie SA for 3.4 billion ($4 billion) is seen as a prelude to a takeover of the whole company. The bid is set to expire Monday, putting pressure on Engie and Suez, which has also expressed concern about the risk of “creeping control” from Veolia.
The government, which holds 24% of Engie, has said a deal must not be hurried. French Finance Minister Bruno Le Maire told reporters Sunday that an agreement between Suez and Veolia is still possible.
“The government calls on both parties to resume talks in coming hours to reach a friendly offer,” the only solution that can protect the interests of employees and the country, Le Maire said.
Veolia, which raised its bid to 18 euros a share on Sept. 30 from its earlier offer of 15.5 euros, said Sunday that it’s “unconditionally” committed not to launch a hostile takeover for Suez after acquiring the stake from Engie. It characterized its discussions with Suez management as “constructive” and said it was providing the guarantee to not push for a hostile bid as part of a demand by Engie’s board for the stake sale.
Suez said it still considers Veolia’s approach to be hostile, calling Veolia’s statement “misleading.” In a letter to Veolia Chief Executive Officer Antoine Frerot, Suez Chairman Philippe Varin said the company “showed goodwill and worked hard to find a solution that could be acceptable to everyone,” but the proposal fell short of preserving two French global players in environmental services.
Veolia, which had planned to sell Suez’s French water activities to avoid antitrust issues, said it has offered to sell some other international water assets to the eventual buyer. Overall revenue of the assets to be sold to that single buyer would amount to 5 billion euros, including 2.2 billion euros for the French water assets, Veolia said in a statement Sunday.
As part of its attempts to rebuff Veolia’s approach, Suez last month created a so-called poison pill, making antitrust issues more complicated for its suitor.
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