Veolia Transport and Transdev agree to merge

The two companies put pen to paper on their merger plans, creating one of the largest transport groups in the world with €8.1bn of combined revenue in 2009. An IPO will take place 12 months after the deal closes, opening the vehicle to new investors.

French state-backed bank Caisse des Dépôts et Consignations (CDC) and Veolia Environnement have signed a definitive agreement to merge their respective transport subsidiaries – Transdev and Veolia Transport.

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

The new group will have a presence in 28 countries and a workforce of 117,000 employees, making it one of the world leaders in passenger transportation, Veolia said in a statement. It recorded combined revenue of €8.1 billion last year with cash flows from operations of about €500 million.

RATP, a French transport group which owns 25.6 percent of CDC’s Transdev, will exchange its position in Transdev for selected French and international assets belonging to Transdev and Veolia Transport, allowing the merger to proceed. RATP’s stake in Transdev is valued at some €340 million. Prior to completing the merger, CDC will subscribe to a €200 million capital increase in Transdev.

The new vehicle will be listed on the stock exchange via a capital increase 12 months after the transaction closes, subject to market conditions, Veolia said in its statement. The aim of the initial public offering is to raise capital to allow the new group to pursue its growth strategy, Veolia added.

Completion of the merger is subject to authorization from the relevant antitrust authorities.