Veolia, Meridiam agree €13bn Suez deal edging out Ardian and GIP

French water giants Suez and Veolia have finally reached an agreement whereby the latter will pair up with fund manager Meridiam in a €13.1 billion deal.

Veolia agreed to increase its bid for Suez, in which it held a 29.99 percent stake and had been offering €18 per share for the remainder, to €20.50 per share. To ensure the takeover meets antitrust laws, an entity called New Suez will be carved out and managed by Meridiam. The agreement brings to an end the interest of Ardian and Global Infrastructure Partners, which had joined forces to make an offer worth €11.9 billion for Suez as tensions between Suez and Veolia became increasingly fraught.

Meridiam will acquire Suez’s municipal water and solid waste activities in France, as well as Suez’s activities in Italy, the Czech Republic, Africa, Central Asia, India, China and Australia. It means Suez’s agreement last week to sell the Australian assets to Cleanaway Waste Management for A$2.5 billion ($1.9 billion; €1.6 billion) will now be scrapped.

A spokesman for Meridiam confirmed to Infrastructure Investor that the firm has raised €8 billion for a single-asset fund to finance the investment, with 60 percent of the LPs in the vehicle originating from France. Meridiam added in a statement that it would retain ownership of New Suez for at least 25 years, invest €860 million in the business over the next five to seven years, and maintain jobs and social conditions for current employees.

Suez and Veolia have entered into a merger agreement lasting until 14 May and have agreed to suspend ongoing or new legal proceedings against each other. The deal is subject to the approval of it having met conditions such as competition and foreign investment laws.

“Today we have reached an agreement in principle that recognizes the value of [Suez],” said Philippe Varin, chairman of the board of Suez, in a statement. “We will be vigilant to ensure that the conditions are met to reach a final agreement that will put an end to the conflict between our two companies and offer development prospects.”

Mathias Burghardt, Ardian’s head of infrastructure, had told Infrastructure Investor two weeks ago that he hoped a compromise between all parties could be reached that could allow Ardian and GIP to manage Suez’s French water business and the international assets.

Asked to comment on the agreement Suez and Veolia have now reached, a spokesman for Ardian and GIP told Infrastructure Investor in an e-mailed statement that: “Ardian and GIP have always been supportive of an amicable solution to the situation between Suez and Veolia in the best interest of all stakeholders.

“We note the announcement made by Suez and Veolia this morning. As we did not participate in the negotiations for this agreement and are currently informed neither on its specifics nor on its implications for all stakeholders, we shall now examine its consequences,” he said.