Engie Accepts Veolia's $4bn Bid for Suez Stake

French energy group Engie has accepted water and waste utility Veolia's €3.4bn ($4bn) offer for its 29.9% stake in Suez, the companies announced on October 5.

Veolia also confirmed it would make a voluntary takeover bid for all remaining shares in Suez, while guaranteeing 100% of the jobs and social benefits of Suez employees. Engie said it had taken note of Veolia’s promise not to make a hostile bid, which would require the approval from Suez's board. However the latter remains unconvinced, saying Veolia's purchase of Engie's stake was done "in a hostile manner and under unprecedented and irregular conditions."

"The group confirms that it will use all the means at its disposal to protect the interest of its employees, its clients and all its stakeholders, in particular to ensure equal and fair treatment of all its shareholders and avoid a creeping takeover or de facto control," Suez said.

Veolia said it would offer Suez's other investors, which include employees and various European funds, €18/share – the same price it paid to Engie and representing a 75% premium to Suez's share price at the end of July. The offer will take place within 12 to 18 months, once regulatory approvals are obtained.

Engie, which announced in late July it was looking to double its divestment target to €8bn, said it would generate a pre-tax capital gain of €1.8bn from the deal.

"The disposal of Engie's stake in Suez is an important step in the group's implementation of its new strategic orientations announced at the end of July," Engie chairman Jean-Pierre Clamadieu said in a statement. "It will enable Engie to clarify its profile and boost its capacity to invest in renewable energies and infrastructure – the two growth areas it is focusing on to support the energy transition."

Veolia previously offered only €15/share but that bid was rejected. Suez's management had advocated for an alternative offer from French investment firm Ardian.