SUEZ ENVIRONNEMENT (EPA:SEV) SUEZ offers a negotiated solution to Veolia supported by a binding offer from Ardian – GIP

Transparency directive : regulatory news

21/03/2021 15:44

press release

Paris, March 21, 2021

SUEZ offers a negotiated solution to Veolia supported by a binding offer from
                                 Ardian - GIP

The SUEZ Board of Directors, in keeping with its core values and its commitment
to safeguarding the Group's social interests, wishes to swiftly find a
negotiated solution with Veolia that takes its expectations into account. These
expectations focus on providing fair value to shareholders, ensuring social
guarantees for employees, and honoring the Group's commitments to its
customers.

The expectations of the Board of Directors are based on the conviction that the
SUEZ Group intends to remain a key player in the ecological transition, at a
time when these issues are increasingly important in France and around the
world. With this in mind, the SUEZ Board of Directors is ready to enter into
negotiations as of today to break the current deadlock, and hopes that Veolia
will respond favorably to this constructive proposal.

On March 20, the consortium submitted a firm and binding offer to the SUEZ
Board of Directors for the creation of a new entity, the outlines of which are
close to those proposed during mediation by the French State. The proposal made
by the Ardian-GIP consortium has been unanimously approved by the SUEZ Board of
Directors, which finds it consistent with the expectations expressed in its
press release of February 26, respectful of the Group's stakeholders, its
shareholders, its customers, and its employees, and supportive of Veolia's aims
by enabling it to substantially strengthen its activities.

The offer provides for the acquisition by the Consortium of several activities
including all the French "Water" and "Recycling and Recovery" (R&R) activities,
as well as several "Water and Technology" activities at the international
level. On this basis a negotiation can start and it must aim to ensure a
healthy level of competition for customers, and, for SUEZ employees, a plan for
the future and for their professional development. This combination will enable
the Group to maintain its technological leadership through high levels of
investment in Research and Development.

The cash consideration proposed for of all the relevant activities amounts to
an enterprise value of EUR15.8 billion, equivalent to a value of EUR20 per
share.

This solution takes into account the interests of all stakeholders:

- Employees in France will see the continuation of SUEZ's activities in France
and the maintenance of their social benefits and their jobs for at least 4
years All the employees of the new combined entity will be offered a
significantly increased stake in the employee shareholding of the new entity
- clients and consumers will benefit from continued competition on the French
market
- shareholders will receive a higher price per share, and will receive it more
quickly and with a greater certainty, particularly in light of the acceleration
of the antitrust proceedings made possible by such solution
- Veolia will be strengthened

The SUEZ Board of Directors of SUEZ is proposing entering into negotiations on
this basis, with the aim of finalizing them as soon as possible and no later
than April 20. The SUEZ Board of Directors is prepared to recommend an
agreement that (i) incorporates a solution based on that contemplated with the
Consortium, as described above, (ii) would enable Veolia to confirm its 4-year
corporate commitments and (iii) would increase Veolia's offer price to a
minimum of EUR20 p.a. (cum dividend).

Philippe Varin, Chairman of SUEZ, has stated: "The SUEZ Board of Directors has
confirmed its willingness to find a negotiated solution with Veolia that is in
the interest of its employees, customers, and shareholders. We now have a
solution, supported by a new proposal from Ardian - GIP, which would enable the
two companies to finalize an agreement in the interest of all the stakeholders,
and that also meets the objectives set by the French State. The Board of
Directors is ready to begin negotiations on this basis immediately".

If, contrary to SUEZ's wishes, a negotiated solution has not been found by
April 20, 2021 at the latest, the Board will accelerate the implementation of
the SUEZ 2030 strategic plan in order to create value for all stakeholders well
in excess of Veolia's current offer. The Board will continue to explore all
available options to show the value potential of each of its core businesses:
"Recycling and Recovery" and "Water and Technologies". This will result in
enhanced opportunities for all SUEZ employees.

Under these circumstances, the SUEZ Board of Directors, which has a duty to
protect the corporate interests of the Group and to find a balance that
benefits all stakeholders, has taken the decision to make the safeguarding
mechanism for retaining the "Water France" activity within the Group
irreversible until September 2024, in order to protect the interests of the
stakeholders. At the same time, the scope of this safeguarding mechanism has
been amended to provide for its dissolution in either of the two following
cases: (i) if an agreement on the main principles of a transaction comprising a
potential tender offer for SUEZ's shares is reached no later than April 20,
2021, or (ii) automatically, if a public cash tender offer equal to at least
EUR22.5 per share is the subject matter of a public commitment of an offeror no
later than May 5, 2021, with or without the recommendation of the SUEZ Board of
Directors(1).

In the event that Veolia withdraws its offer within six months, the Consortium
could consider the filing of a tender offer on the whole share capital of SUEZ.
The implicit consideration of this offer, calculated on the basis of the
valuation of all the activities included in the Consortium's offer, would be
equal to EUR20 per share (cum dividend), subject to the support of the SUEZ
Board of Directors, the Intersyndicale, and the public authorities; the
completion of due diligence on the rest of the Group; and the Consortium's
capacity to finance such an offer.

Details regarding the elements set out above are provided in the additional
information addendum attached to this press release.

SUEZ :
Since the end of the 19th century, SUEZ has built expertise aimed at helping
people to constantly improve their quality of life by protecting their health
and supporting economic growth. With an active presence on five continents,
SUEZ and its 90,000 employees strive to preserve our environment's natural
capital: water, soil, and air. SUEZ provides innovative and resilient solutions
in water management, waste recovery, site remediation and air treatment,
optimizing municipalities' and industries' resource management through "smart"
cities and improving their environmental and economic performance. The Group
delivers sanitation services to 64 million people and produces 7.1 billion m3
of drinking water. SUEZ is also a contributor to economic growth, with more
than 200,000 jobs created directly and indirectly on an annual basis, and a
provider of new resources, with 4.2 million tons of secondary raw materials
produced. By 2030, the Group is targeting 100% sustainable solutions, with a
positive impact on our environment, health, and climate. SUEZ generated total
revenue of EUR17,2 billion in 2020.

Contacts:
Media
Isabelle Herrier Naufle
isabelle.herrier.naufle@suez.com
+33 6 83 54 89 62
Twitter : @SUEZ

Analysts/Investors
Cécile Combeau / Baptiste Fournier / Julien Minot
+33 1 58 81 55 71 / 54 85 / 37 09

Find out more about the SUEZ Group on the website & on social media
Facebook, Twitter, Linkedin, Youtube

(1) The detailed conditions governing the dissolution of the safeguarding
mechanism are included in the additional information addendum attached to this
press release.

Additional information

1. A negotiated solution:

All efforts of SUEZ to reach a negotiated solution have not succeeded so far.
The current EUR18 per share (cum dividend) proposal from Veolia, unchanged
since October 5, 2020, is not acceptable. The perimeter proposed by Veolia on
March, 11, 2021 is also not acceptable.

Today's announcement offers a new opportunity to come to a satisfactory
agreement for our shareholders and our stakeholders having regard to the
clients, social commitments, and price.

2. A negotiated and recommended solution with the Consortium and crystallizing
a higher value:

a. Veolia is a 29.9% shareholder: The Board of Directors of SUEZ is fully open
to a negotiated solution with Veolia as long as it is in the interest of all
SUEZ's shareholders and stakeholders, and at a fair price.

b. To facilitate a negotiated and recommended solution SUEZ has continued to
actively work with Ardian/GIP (the Consortium), two leading investors in the
infrastructure field. The Consortium has made a binding and fully funded offer
to purchase part of the SUEZ business for a cash consideration of EUR11.9bn.
The businesses covered by the offer made by the Consortium represent EUR9.1bn
of sales pro-forma in 2019 and include - in addition to certain key Water and
Tech activities - all of the Group's activities in France. This set of
activities (i) emerged from the recent mediation attempt by the French State
and (ii) integrates Veolia' proposal as at March 11, 2021, extended to include
the necessary international Water activities to provide it with the critical
size, a sufficient international dimension and R&D capabilities.

i. The Board of Directors of SUEZ believes that this set of activities would be
also sufficient to guarantee to clients the respect of SUEZ's engagements to
provide essential services in the long-term

ii. This proposal is in line with the goals of the French State, as it paves
the way towards preserving the existence of two viable French industrial
champions in the environmental sector, and maintains the necessary competitive
levels for the benefit of local authorities, companies and citizens.

iii. The implied transaction multiple of ~9.1x 2019 EBITDA is well above the
implicit valuation of these businesses within SUEZ in past trading, and above
the multiple reflected by Veolia' offer.

c. The Board of Directors of SUEZ proposes to engage in negotiations on this
basis with an aim to have them finalized as soon as possible and no later than
April 20. The Board of Directors of SUEZ will be ready to recommend an
agreement which would (i) comprise a solution on the basis of that contemplated
with the Consortium as described above, (ii) confirm the social commitments of
Veolia for 4 years starting from the completion date of the transaction with
the Consortium and (iii) increase its offer price per share to at least EUR20
(cum dividend).

d. The binding offer made by the Consortium is subject the conditions set forth
in Appendix A.

e. Following the receipt of such binding offer, SUEZ granted an exclusivity to
the Consortium in respect of the businesses the Consortium has proposed to
acquire for a period of thirty days that may be extended to May 30, 2021(2).

(2) This exclusivity period will be extended to May 30, 2021 in the event of an
agreement on the main terms of an amicable solution on the basis of the offer
from the Consortium. In case of a breach of this exclusivity undertaking, SUEZ
will have to pay an indemnity of EUR50 million to the Consortium. If prior to
June 30, 2021, the board of directors of SUEZ shall recommend a tender offer on
SUEZ not involving a transaction with the Consortium equivalent to the one it
has proposed, SUEZ will have to pay an indemnity corresponding to a portion of
the increase in the tender offer price in comparison to the price of EUR18 per
share, within the limit of EUR50 million. The two aforementioned amounts are
not cumulative.

3. Offer for 100%

a. If, within 6 months from the date hereof, Veolia withdraws its public tender
offer or if this offer terminates, the Consortium could consider the filing of
a public tender offer in cash (the Public Offer) on SUEZ subject to the
following conditions:

i. the support of the Public Offer by the Board of Directors of SUEZ;
ii. the support of the Public Offer by SUEZ Intersyndicale;
iii. the support of the Public Offer by the French public authorities and
government;
iv. the completion of a satisfactory due diligence on the part of the group
that is not included in the set of activities mentioned above; and
v. the ability to fund the Public Offer.

The implicit price of this tender offer, calculated on the basis of the
valuation of the set of activities concerned by the binding offer received by
the Consortium, would be equal to EUR20 per share (cum dividend).

4. Acceleration of the implementation of SUEZ 2030 plan:

In the absence of any negotiated and recommended solution, the Board of
Directors of SUEZ is highly confident in the ability of SUEZ, on a standalone
basis, to best preserve the interests of all its stakeholders and to create
substantially more value than the current Veolia offer. This potential is
confirmed by SUEZ's strong trajectory for the coming years. The 2020 results
and initial 2021 trading confirms our confidence in SUEZ's strong commercial
and operational performance. The Board of Directors and management of SUEZ are
committed to continue to explore every avenue to ensure this value is available
to shareholders and accelerate the implementation of the SUEZ 2030 plan. This
is evidenced by the many signs of interest it has received for all or parts of
these individual businesses.

a. There are exceptional growth opportunities in both our main businesses -
Water & Tech and R&R. However, these businesses have different growth,
commercial dynamics, and cost of capital characteristics, and as a result are
fundamentally undervalued within SUEZ today.

b. SUEZ will explore and review all options to ensure that SUEZ shareholders
will benefit more clearly from higher value from these businesses.

i. Employees and clients will have the security and certainty of these agile,
well capitalized entities with supportive shareholders prepared to invest;
and

ii. SUEZ's shareholders will see higher value for these businesses both today
and going forward compared to what is reflected in Veolia' current offer

c. The Board of Directors foresees that SUEZ's shareholders would also benefit
from a distribution of higher ordinary and extraordinary dividends.

d. Today, the profiles of the two parts of the business are as follows:

i. Water and Tech businesses have pro-forma 2019 sales and EBITDA of EUR12,997
million and EUR2,629 million respectively, out of which EUR7,074 million and
EUR1,767 million will be Water and EUR5,923 million and EUR863 million for
Tech.

ii. The Recycling and Valuation businesses of the Group have pro-forma 2019
sales and EBITDA of EUR3,693 million and EUR435 million, respectively.

e. This strategy would be built in full transparency with the Group's employees
and would be submitted in due course to the shareholders in order to protect
the minority shareholders.

5. Implementation of the safeguarding mechanism of the "Water France"
activity

The Group is increasingly concerned that Veolia, a direct competitor, is
seeking creeping control of SUEZ. This is evidenced by 1) the breach of Veolia
commitments to amicability, 2) its refusal to put an appropriate value on the
table,

3) its attempts on questionable grounds to recover its voting rights suspended
pursuant to antitrust rules and impose itself, directly or indirectly, at the
upcoming shareholders 'meeting and 4) its threats to both SUEZ and to potential
buyers to prevent SUEZ from carrying through disposals, as part of SUEZ's plan
announced in October 2019 and redeveloped in further details in September 2020,
which would create value directly for SUEZ's shareholders.

In this context, the Board of Directors of SUEZ has decided in order to
preserve the corporate interest of SUEZ, and effective as of today, to make
irreversible until September 2024 the safeguarding mechanism of the "Water
France" activity within the SUEZ Group. At the same time, the scope of this
safeguarding mechanism has been amended and as a result, the Foundation will be
dissolved in each of the following cases:

a. If (i) at the latest on April 20, 2021, SUEZ SA finds an agreement on the
main terms of a transaction comprising a potential tender offer on SUEZ SA, and
then (ii) at the latest on May 20, 2021 SUEZ SA entered into a definitive
agreement consistent with such main terms, and (iii) the contemplated
transaction is completed prior to September 30, 2022.(3).

b. If a qualifying offer has occurred, i.e. a full-cash public offer to acquire
all the shares issued by SUEZ SA for an offer price(4) at least equal to
EUR22.5 per SUEZ SA share(5), which is the subject matter of a public
commitment of an offeror no later than May 5, 2021(6), is approved by the AMF
at the latest by June 29, 2021 and has a successful outcome at the latest by
September 30, 2022.

The other terms and conditions of this mechanism remain unchanged. For full
transparency, a summary of the functioning of the Foundation is provided below
and its conditions of administration setting forth in detail the above
principles as well as the Foundation's by-laws, are made available on SUEZ
website.

In addition, as announced in September 2020, SUEZ intends to further study the
project of opening up the capital of SUEZ Eau France to its employees.

(3) Or prior to such date, if the deactivation of the safeguarding mechanism of
the "Water France" activity is necessary to implement a step for the completion
of the transaction previously agreed.
(4) Price not subject to any downward adjustment otherwise that to take into
account dividends or distributions.
(5) This price corresponding to the possibility for the offeror, whoever it is,
to question the integrity of the SUEZ group through the disposal of its French
water business.
(6) However, in the event an agreement on the main terms of the transaction
comprising a potential tender offer on SUEZ SA would have been found at the
latest on April 20, 2021, the deadline of May 5, 2021 (for a public commitment
of an offeror on a tender offer price at least equal to EUR22.5 per SUEZ SA)
share will be automatically extended to May 20, 2021.

Reminder regarding the main characteristics of the mechanism established on
September 23, 2020 in order to preserve the integrity of the "Water France"
activity within the SUEZ group

In the context of the decision of the Board of Directors of SUEZ to make the
safeguarding mechanism of the "Water France" activity irreversible until
September 30, 2024 (except in cases where such mechanism will become again
automatically reversible as set out in this press release), the main
characteristics of this mechanism are reminded hereafter:

* The sole purpose of this mechanism is to preserve the integrity of the "Water
France" activity within the SUEZ group in accordance with SUEZ's corporate
interest and to prevent any dismantling project of the SUEZ's French water
activities, as well as the business of designing and building water treatment
installations in France and the R&D activity associated with that division;

* This mechanism was established on September 23, 2020 through an independent
non-profit Dutch foundation;

* Except for the amendments to the conditions of administration which occurred
today, there has been no change to the mechanism since September 23, 2020;

* SUEZ has only transferred to the foundation (which by-laws are publicly
available) one ordinary share of each of the two main subsidiaries involved in
the French water business of SUEZ, namely SUEZ Eau France and - in order to
avoid a disposal of SUEZ Eau France through a transfer of its parent company -
SUEZ Groupe;

* The foundation is managed by three people who compose its board of directors:
a former employee of SUEZ, a member of SUEZ's employee representative bodies
and a Dutch lawyer. Their decisions are taken by simple majority. The powers of
the board of directors of the foundation are limited to preventing the sale of
the French Water division;

* The mechanism in place does not prevent the filing of a tender offer on SUEZ.
It simply aims at ensuring that the said tender offer cannot jeopardize the
integrity of the "Water France" activity within the SUEZ group;

* The by-laws of the two companies concerned by the transfer of a share to the
foundation (SUEZ Eau France and SUEZ Groupe), which are public, had been
amended in September 2020 in the context of the establishment of this mechanism
to provide for the need to obtain the unanimous approval of the shareholders
(namely, to date, the SUEZ group and the foundation) for any contemplated
transfer of the "Water France" activity outside the SUEZ group for a period of
four years, as well as for certain other decisions in case of circumvention of
the mechanism;

* At the expiration of the aforementioned four-year period, and subject to the
cases mentioned in this press release, it will be possible to proceed to the
dissolution of this mechanism.

                                Appendix A:

The binding offer made by the Consortium is based notably on the following
assumptions:

* Completion of the acquisition of the set of activities targeted by the offer
as soon as the Consortium obtains the required antitrust and regulatory
approvals (with a possibility of sequenced closings) and in any event,
regardless of the completion of Veolia's tender offer;
* The set of activities should be able to operate as a standalone business
under the SUEZ brand (i.e. holding all the intellectual property rights
necessary for its business activity);
* Absence of third party rights likely to prevent or to negatively affect the
completion of the acquisition or the ownership of the set of activities by the
Consortium (including obtaining the necessary waivers and confirmations) ;
* Final transaction structure acceptable for financing banks at the level of
the acquired businesses;
* Assumption of an absence of early repayment of debt for the entities
comprises in the acquired perimeter;
* Absence of material unforeseen negative event in relation to the
implementation of the transaction; and
* Agreement on the carve-out documentation and carve-out costs borne by SUEZ.

The binding offer made by the Consortium is subject to customary completion
conditions such as:

* Support of SUEZ Intersyndicale;
* Full recommendation of the transaction by the board of directors of SUEZ
according to the financial conditions of the binding offer;
* Full recommendation of the offer by the board of directors of Veolia in the
context of a friendly solution
* Satisfactory completion of the carve-out documentation;
* Absence of opposition by the French State or the CSE of SUEZ; and
* Positive consultative vote on the transaction by the shareholders of SUEZ

The Consortium reserve the right to add additional conditions depending on the
discussions relating to a potential amicable agreement with Veolia (as well as
any unforeseen event).

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SUEZ ENVIRONNEMENT (EPA:SEV) SUEZ offers a negotiated solution to Veolia supported by a binding offer from Ardian – GIP

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