Cleanaway’s $2.5 billion bid to buy the Australian recycling assets of French group, Suez is dead but now for Plan B?
As reported, the French companies, Suez and Veolia agreed to bury the hatchet on Monday (and not in each other’s balance sheets) and agreed to a $US15 billion merger.
Cleanaway now expects Plan B to come into effect: The acquisition of a number of Sydney-based Suez assets for $501 million.
In a statement released on Monday, Veolia and Suez announced that their respective boards of directors reached an agreement in principle after Veolia lifted its offer price to €20.50 for each Suez share.
Part of the deal was that the $2.5 billion purchase of Suez’s Australian waste and recycling assets is off.
No mention was made of the Plan B deal to buy the recycling and waste assets centred in Sydney for $501 million.
In a statement to the ASX on Tuesday, Cleanaway said that in such a case (of the French companies ending hostilities and agreeing to merge), “subject to various conditions, Cleanaway will acquire a portfolio of strategic post collection assets in Sydney.
“The assets comprise two landfills and five transfer stations and will be acquired for $501 million.”
“Cleanaway has been informed by Suez that it has reached an in‐principle agreement with Veolia Environnement S.A. for a takeover of Suez by Veolia.
“Suez and Veolia announced the in‐principle agreement, which remains subject to documentation and other formalities, on 12 April 2021.
“Cleanaway expects that the Suez R&R Acquisition will be terminated on, or prior to 6 May 2021, and that the Sydney Assets Acquisition will proceed.
“Suez has announced that the in‐principle agreement provides for the suspension of ongoing legal proceedings, and that all legal proceedings will be withdrawn upon entry into the definitive agreements between Suez and Veolia.
Cleanaway said that in 2020 “the Sydney Assets generated net revenue of $193.1 million and normalised EBITDA of $72.9 million.”
“Based on the expected timeline for completion of the takeover of Suez by Veolia, the Sydney Assets Acquisition is expected to complete in the second quarter of 2022,” Cleanaway said on Tuesday.
Cleanaway also said it will provide further information in relation to the proposed funding of the acquisition in due course.
Seeing that during the spat, Veolia opposed the sale of the Australian assets and said it had plans for cost cutting there (to help pay for the high $US15 billion price), you have to wonder if this latest, smaller deal will happen, or whether the merging companies will renege.
Certainly investors think positively – the shares rose 2.6% to $2.535 yesterday, so no doubts there.
