(Bloomberg) -- Veolia Environnement (OTC:VEOEY) SA’s offer to buy the majority of Engie SA’s stake in Suez SA (OTC:SZSAY) for 2.9 billion euros ($3.4 billion) is too low and there may be alternative bids, Engie Chairman Jean-Pierre Clamadieu said, suggesting Veolia may have to raise its offer for its smaller French water and waste-treatment rival.
Veolia made a surprise bid on Sunday to acquire a 29.9% stake in Suez from Engie, the first step to a full takeover. The deal, deemed “particularly hostile” by Suez Chief Executive Officer Bertrand Camus, would create a global waste and water giant with more than 40 billion euros in revenue as global warming and pollution boosts the need to recycle resources and treat hazardous products.
“The value of Suez is higher than the basis of these discussions,” as shown by the 5.7% jump in Veolia shares Monday, Clamadieu said on BFM Business television Friday. He asked Suez to come up with another offer, and said that Engie will consider an alternative bid “with great care if it can be implemented rapidly.”
Speaking on BFM Business television Thursday, Suez Chairman Philippe Varin reiterated his support for Camus and his plan to turn around the company. The board has encouraged the CEO to seek alternatives to Veolia’s offer, Varin said.
Veolia’s bid got some support Thursday from the French government, which owns 24% in Engie, when Prime Minister Jean Castex said the proposed deal “makes sense.”
Any bid for part or all of Suez must preserve jobs and avoid the creation of monopolies in water and waste, Castex said, adding that he’d rather have French investors in Suez to avoid “a loss of sovereignty in this strategic industry.”
Clamadieu asked Veolia and Suez to hold talks to see if Veolia can raise its offer and make it more “inclusive” for Suez’s management and employees. The project to create a French giant in environmental services is “attractive in some ways,” he said.
Suez shares were trading 1.8% higher at 15.14 euros at 11:01 a.m. in Paris, nearing Veolia’s 15.50 euro-per-share offer. The stock surged 19% on Monday, the first trading day after Veolia’s move.