By Gwénaëlle Barzic and Sarah White

PARIS (Reuters) – French waste and water company Veolia

hiked its bid for a stake in rival Suez

on Wednesday, and offered a negotiating window for any subsequent full takeover proposal after its initial approach was rebuffed.

Veolia said it had raised its offer for a 29.9% stake in Suez held by power group Engie

to 3.4 billion euros ($4 billion) from 2.9 billion euros.

The company has been trying to persuade Engie to sell the stake as prelude to launching a full takeover bid for Suez, arguing the two would form a global waste and water champion better equipped to take on rivals, including from China.

But Suez has vehemently rejected the approach, describing it as hostile, and set about creating a foundation for its French water business, which could be a hurdle for any Veolia takeover.

That has led to an increasingly acrimonious tit-for-tat which the French government, a shareholder in Engie, has been trying to defuse.

Veolia on Wednesday piled the pressure on Engie to come to a swift decision by saying its new 18 euros per share offer – up from 15.5 euros previously – would expire by the end of the day, sticking to a timetable it had set itself at the end of August.

“It (the offer) is still due to run out at midnight tonight,” Veolia Chief Executive Antoine Frerot told reporters.

But Veolia also amended its bid by saying it would only launch a subsequent tender offer for the whole of Suez with the blessing of the company’s board, and offered a six month period during which to negotiate, should it acquire the 29.9% stake.

Suez shares were up 7.2% to 15.99 euros at 0829 GMT. A full bid for Suez at 18 euros per share