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Veolia closes in on Suez bid despite last-gasp pushback

PARIS (Reuters) - French utility Suez SEVI.PA on Thursday floated a last-minute alternative to a takeover by rival Veolia VIE.PA involving private equity group Ardian, but its manoeuvre looked unlikely to succeed and arrived too late for selling shareholder Engie.

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Veolia closed in on an agreement to buy power group Engie's ENGIE.PA 29.9% stake in Suez on Wednesday night, in a prelude to a full takeover bid and marking a breakthrough after weeks of hostilities between the parties.

Veolia has been trying to persuade Engie to sell the stake, including by raising its bid to 3.4 billion euros. It now has the green light from Engie’s board, and an agreement to finalise details of their deal by Monday.

French Finance Minister Bruno Le Maire, who has appealed for dialogue, said on Thursday the Suez-Veolia situation was moving in the “right direction.” The French state is a major Engie shareholder.

Suez had rejected Veolia’s overtures from the outset and created hurdles to a deal, including by putting its French water business in a foundation.

On Thursday, Suez backed a proposal by Ardian to buy Engie’s stake and launch its own tender offer for all Suez shareholders, after the private equity firm said it wanted to set up a consortium of investors to carry out a deal.

But Ardian’s proposal did not detail a price, and Engie Chairman Jean-Pierre Clamadieu said on Wednesday it was now too late for any alternatives.

Suez said it had taken note of Veolia and Engie’s statements, and the extension of Veolia’s offer to Engie until Oct. 5.

“Suez continues to actively work within that framework and with the spirit of open dialogue that France’s minister of the economy, finance and the recovery has called for,” Suez said.

Engie is now hoping to persuade Suez to dismantle its foundation plans by Monday, paving the way for friendly talks with Veolia, two sources familiar with the matter said.

Even without that, however, Veolia is likely to press ahead with its full tender offer for Suez, the sources added, while trying to get Suez’s management on board in ensuing discussions.

Veolia has argued that a takeover of Suez would drive savings and helped the merged entity fend off competition emerging from China. Some analysts have questioned whether its bid at 18 euros per share for Engie’s stake, up from 15.50 euros initially, would yield the same value for Veolia.

Reporting by Dominique Vidalon, Sarah White, Gwenaelle Barzic and Blandine Henault; editing by Jason Neely and Jane Merriman

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