Group

SUEZ announces a sale agreement with Cleanaway for the Recycling and Recovery activities in Australia subject to the results of negotiations between SUEZ and Veolia

SUEZ has signed, on April 5th, 2021, a sale agreement for its Recycling and Recovery business in Australia to Cleanaway Waste Management Limited (Cleanaway). This agreement is fully in line with the SUEZ 2030 strategic plan. It specifically allows for the possibility of Veolia taking control of this asset, through a takeover offer, on the basis of SUEZ proposal to Veolia on March 21, 2021, or through a direct purchase of the Australian R&R activities1. Under the agreement, in certain circumstances, a selection of landfill and transfer station assets in the Sydney area would still be sold to Cleanaway 2.

The negotiations with Cleanaway have taken place over several months and resulted in an agreement that offers real prospect for the development of this business and recognizes the commitment and professionalism of SUEZ’ Australian employees. Further, SUEZ thanks Cleanaway for its willingness to reach an agreement and for having taken into account its current context, notably to still allow for the possibility that Veolia could acquire this asset.

The agreement signed with Cleanaway reflects an enterprise value of 2.52 billion Australian dollars, representing an implicit multiple of 12.9x its reported 2020 EBITDA (or 11.7x its normalized 2020 EBITDA).  SUEZ emphasizes that this value shows the relevance of its asset rotation strategy under the SUEZ 2030 strategic plan. Cleanaway’s offer allows to achieve this objective of creating value in the corporate interest of the Group.

A disposal in line with SUEZ 2030 strategic plan to refocus the Group on high value-added activities

The  disposal of the Recycling and Recovery business in Australia forms part of the SUEZ 2030 strategic plan, introduced on October 2, 2019 and further detailed on the 2021 and 2022 forecast presentations on September 22, 2020 and then at the 2020 annual results presentation on February 26, where SUEZ insisted on the necessary rotation of its assets in order to create value for its shareholders.

The first disposals (Recycling and Recovery activities in Sweden, Germany, Poland, Luxembourg, Netherlands) and the first acquisitions to strengthen the Water, Tech and specialized treatments (China, Germany and Spain) allow the Group to refocus and to highlight the value potential that was not fully appreciated by the markets. In this context, the Recycling and Recovery activities in Australia were identified as part of the second wave of the asset rotation program, assessed by SUEZ during 2020 and ultimately detailed on September 22, 2020, which completion is required to ensure the strategic continuation of the Group if the desired negotiation with Veolia were to fail.

A conditional agreement that allows for Veolia to negotiate a global solution with SUEZ

SUEZ continues to seek a friendly, negotiated solution with Veolia and is accordingly leaving the door open for negotiations with Veolia for a global agreement. The conditions signed with Cleanaway for the Recycling and Recovery business in Australia are in line with SUEZ’s proposal to Veolia on March 21, 2021.

To this end, this agreement is conditional and expressly provides that SUEZ may terminate it if, by May 5, 2021:

  • SUEZ announces and reaches an agreement on the main terms of a transaction comprising a tender offer for SUEZ ; or
  • A tender offer for a cash consideration at least equal to €22.50 per share (cum dividend) for 100% of SUEZ is the subject matter of a public commitment3.


Furthermore, until April 21, 2021, it is possible for any third party, including Veolia, to submit a superior offer on the Recycling and Recovery business in Australia4. If such a superior offer was to arise, Cleanaway would be notified and has an ability to match5.

SUEZ’s agreement with Cleanaway is also subject to various conditions including ACCC approval, an approval under the New-Zealand foreign investment regime (OIO), Cleanaway’s successful financing of the transaction, no material adverse change and SUEZ obtaining FIRB approval in connection with a pre-closing restructuring involving its water business.

In the event the Australian Recycling and Recovery transaction is terminated due to SUEZ exercising its right to terminate the transaction by May 5, 2021 or other events6, Cleanaway and SUEZ have agreed that Cleanaway will acquire a portfolio of post collection assets in the Sydney area. The assets comprise two landfills and five transfer stations and will be acquired for 501 million Australian dollars. This transaction would also be subject to various conditions including ACCC Approval, no material adverse change and a change of control of SUEZ.

1 Please refer to the attached Additional Information notice for further details.
2 It is to be noted that Veolia would have, in any case, difficulty retaining those assets due to anti-trust.
3 Please refer to the attached notice for further details.
4 Please refer to the attached Additional Information notice for further details.
5 And if Cleanaway decided not to match any superior offer it would be entitled to a 50% share of the difference between (i) the sale price for the Recycling and Recovery business in Australia resulting from such superior offer and (ii) the price resulting from the agreement initially entered into between Cleanaway and SUEZ.
6 Please refer to the attached Additional Information notice for further details

Contacts

Press: Isabelle Herrier Naufle
isabelle.herrier.naufle@suez.com +33158815562
Analysts & Investors: Cécile Combeau - Baptiste Fournier - Julien Minot
+33158812405

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