Cleanaway’s transformative $2.5 billion deal to acquire the Australian recycling assets of Suez has been binned after the French waste giant agreed to end hostilities with suitor Veolia and reached a deal on a merger.
In a statement released on Monday evening AEST, Veolia and Suez announced that their respective boards of directors reached an agreement in principle after Veolia lifted its offer price to €20.50 per Suez share.
Cleanaway’s shares soared 16 per cent last Monday after it announced the $2.5 billion agreement to acquire Suez’s Australian assets, but this was subject to a number of conditions including Suez not agreeing to a merger with its French rival which already owned a 29.9 per cent stake.
The joint announcement includes reference to “The termination of the agreements with Cleanaway in accordance with their terms concerning the disposal of the assets in Australia (subject to the Sydney assets) and the suspension of any other significant disposal.”
The Sydney assets refers to a Plan B that is triggered if Veolia successfully bids for Suez. This allows Cleanaway to acquire these Sydney-based assets from Suez for $501 million.
Veolia had been scathing of Suez’s agreements to sell the Australian operations, or these Sydney assets to Cleanaway at prices which favoured the $5 billion ASX-listed group.
As recently as Friday the French group referred to “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.”
“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 said.
The two French groups have agreed to enter into definitive merger agreements by May 14 and end their legal battles in the French and Australian courts.