French waste giant Veolia has accused takeover target Suez of selling its Australian assets to Cleanaway for a bargain price and acting to the detriment of its investors.
Cleanaway, the $5 billion ASX-listed waste management company, announced on Tuesday it had agreed to buy all of the Australian business of Suez for $2.5 billion.
In a release to the French stock exchange on Tuesday, Veolia said: “In contradiction with its communication and to the detriment of its shareholders, Suez still seems to want to do everything possible to make it impossible to reach an agreement with Veolia.
“This sale is being made on terms that are contrary to the interests of Suez, which is depriving itself of a profitable asset in an attractive region, and to the interests of its shareholders, as the sale can only have a negative impact on Veolia’s offer.”
It specifically criticised the part of the sale that is almost certain to proceed whether Veolia’s hostile takeover succeeds or not: “Namely the transfer to Cleanaway of a number of significant and very profitable assets, without any competition, and at a knock-down price of $501 million.”
Cleanaway’s offer for the Australian business of Suez is subject to a takeover deal not being reached with Veolia. Suez is able to terminate the deal by May 6, 2021 if it reaches an agreement with Veolia.
It may also terminate by April 26 if a superior offer for Suez Australia is made and not matched by Cleanaway.
Veolia said it continues to use all legal means to prevent the sale of these strategic assets and, if necessary, to have them cancelled. Veolia and Suez appeared before the Federal Court on Wednesday for a directions hearing. Veolia claims that any asset sale by Suez would breach French takeover laws.
Veolia, which owns a 29.9 per cent stake in Suez, said it also reserves the right to request a management assessment of this agreement which is abnormally advantageous for a foreign operator competing with Suez and Veolia.
“In spite of the stubbornness of Suez’s management, which continues to resort to procedures that make neither industrial nor financial sense, and this despite a call to order from the [the French courts] and the hand extended by Veolia, the group continues to propose to Suez to discuss its project calmly,” Veolia said.
JP Morgan, which has an “overweight” recommendation and a $2.55 price target on Cleanaway, has described the deal to acquire Suez’s local business as a transformative transaction for Cleanaway.
“We view the transaction as compelling for Cleanaway given Suez’s prized infrastructure assets, in particular the Sydney metro post collection assets which have been a material gap in Cleanaway’s national footprint, a clear focus of its Footprint 2025 strategy.”
Cleanaway shares were 3.5 per cent lower at $2.46 Wednesday afternoon. The company gained 15.9 per cent in value on Tuesday.
Source: Thanks smh.com