LONDON (Reuters Breakingviews) – Concise insights on global finance in the Covid-19 era.
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FRENCH FARCE. So much for hopes of an amicable solution to Veolia’s proposed takeover of Gallic waste-to-water competitor Suez. On Sunday Veolia Chief Executive Antoine Frérot ditched amity to launch a hostile 18 euros per share offer for the 70% of Suez the company doesn’t own, valuing its target at 21 billion euros including debt. That earned him a spanking from rival boss Bertrand Camus, who described Veolia’s proposal as “illegal”, and French finance minister Bruno Le Maire who urged a return to friendly talks.
Suez investors should benefit from the antagonism: infrastructure fund Ardian and New York-based Global Infrastructure Partners are preparing a counter-offer. If pushed, Veolia could pay around 21 euros per share and still make a return in line with its estimated cost of capital of 6.4%, according to a Breakingviews calculation which assumes 500 million euros in cost savings and a 28% tax rate. For Suez shareholders, friendship is over-rated. (By Christopher Thompson)
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