Veolia sees Suez bid price as fair, does not rule out hostile bid

FILE PHOTO: A Veolia logo is seen at the Veolia Household Waste Recycling headquarters in Lezennes, France, August 31, 2020. REUTERS/Pascal Rossignol

PARIS (Reuters) - The price that French waste and water management company Veolia VIE.PA is offering for Suez SEVI.PA shares is "fair", according to the company's top executive, who did not rule out a hostile bid.

Veolia on Sunday launched a bid for Suez at 15.50 euros per share, offering to buy a 29.9% stake in the firm from utility Engie ENGIE.PA for 2.9 billion euros ($3.45 billion), in the first step to a full takeover.

The overture elicited an unenthusiastic response from Suez, which flagged “great uncertainties” raised by the transaction, while Engie, which wants to sell assets, is holding out for a higher price, sources close to the matter said.

Asked on BFM Business TV whether Veolia might consider a hostile bid if Engie does not agree to sell its shares, Chairman and chief executive Antoine Frerot said “nothing can be ruled out”.

“We’ve studied the price we’ve put to them. It’s a good price,” Frerot said. Asked whether it was Veolia’s final offer, Frerot only reiterated that the price was fair.

Veolia - already a world leader in the waste and management industry, although the sector is very fragmented - has argued that the deal would create a global champion that would be better placed to see off emerging competition from China.

Frerot said he had reached out to Suez Chief Executive Bertrand Camus about the project in early August.

Reporting by Sudip Kar-Gupta, Geert De Clercq, Benjamin Mallet and Sarah White, editing by Louise Heavens