French regulator clears Transdev/Veolia merger

Veolia Transport and Transdev have received approval from the French regulator to proceed with their merger plans, which will create one of the largest transport groups in the world with more than €8bn in sales. The new vehicle is expected to go public in the next 12 months.

The French competition authority has authorised Caisse des Dépôts et Consignations (CDC) and Veolia Environnement to merge their respective transport units – Transdev and Veolia Transport.

The approval clears the way for the emergence of a new transportation powerhouse with a presence in 28 countries and a workforce of 117,000 employees. The two transport units recorded combined revenues of €8.1 billion in 2009 with cash flows from operations of some €500 million, Veolia said in a previous statement.

For infrastructure investors, the merger presents opportunities on two fronts: asset disposals and a public listing. The former is one of the conditions imposed by the French anti-trust agency and will require the newly merged company to sell part of its holdings in urban transportation networks in the south of France as well as some of its inter-city transportation assets.

Both groups had also previously announced their intention to float the new vehicle on the stock exchange via a capital increase once the merger is complete. That means the new group could be listed sometime this year or in early 2012. Veolia had said in a previous statement that the new group will use the capital raised via the listing to pursue its growth strategy.

Under the terms of the merger agreement, Veolia Environnement will be the industrial operator of the jointly owned group with CDC as long-term strategic shareholder.