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Will SUEZ take off in the UK? – EM – Removal Magazine

Macquarie Asset Management’s commitment doesn’t make a good thing

Australia instead of France? Is this the correct shorthand version of the ‘irreversible’ deal commitment announced yesterday by Southern Continent-based Macquarie Asset Management to acquire SUEZ’s once-waste operations in the UK? No chance.

Because it is currently open who will be the new owner in the end. The reality is that the Australians’ “unilateral declaration of intent” does not constitute a just cause. This is just the starting signal for a sales process, the outcome of which remains to be seen.

The message is very beautiful. The EUR 523 billion investment fund from Sydney included £2 million for the former SUEZ recycling and recovery division, equivalent to EUR 2.4 billion. That’s a comfortable 17x EBITDA**. Significantly more than what VEOLIA paid.

Regulation is not the problem

However, the Macquarie Declaration currently amounts to little more than a kind of engagement promise. Neither parents nor other institutions of the virtual bride say yes. Because acquisition depends on at least two factors. Point number 1: The British Competition and Markets Authority CMA must agree. This is not a major problem, however, as there appear to be exploratory talks finalized to divest other assets in the UK’s industrial water business in addition to the sale. Accordingly, Estelle Braklianoff, VEOLIA’s CEO since July 1, hopes that her company will “receive official approval for the contract.”

Macquarie logo. Source: Marquarie/Wikipedia

The real sticking point is elsewhere. New SUEZ and the consortium of investors behind it, including French Meridim SAS and US fund Global Infrastructure Partner, have the right of first refusal as part of the merger agreement. You then have 30 days, starting yesterday Monday, to submit your own offer. It is an established fact that nouveau SUEZ is very interested in resuming UK business. “Suez confirms its interest in acquiring the former Suez R&R assets in the UK and will review the terms of the agreement with Macquarie in detail, under which Suez will decide whether or not to exercise its right of first refusal,” the group said.

Reasons for “yes”.

There are enough reasons to say yes to buying. After the hemorrhaging of the merger, SUEZ remained mainly business areas in the parent country of France. International operations were largely absorbed by VEOLIA. A return to England, where business was booming, would be a big step away from being a land-locked company. Additionally, British business is considered particularly scalable.

Either way, Down Under or La France, the sale will be a boon for VEOLIA. More precisely, an air drop.

And the only one. Other antitrust authorities have also pushed for a partial sale. All transactions, including the UK deal, will drain VEOLIA’s coffers of €3.4 billion. It will largely negate dependence on external capital and leverage.

For VEOLIA, this means “additional investment capacity to finance growth in high value-added markets,” according to a VEOLIA statement written in French and English.

Kg

Top image: Macquarie’s Sydney headquarters. Photo: Danausi / https://commons.wikimedia.org/w/index.php?curid=5296535:

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* Full company name: Suez Recycling and Recovery UK Group Holdings Ltd. All SUEZ name components were recently rebranded as Vigie.

** EBITDA = A company’s pre-tax operating cash flow. Summary of earnings before interest, taxes, depreciation and amortization. In German; Earnings before interest, taxes, depreciation of tangible assets and depreciation of intangible assets. Source: Wikipedia