The 3rd edition of Investir Day brought together - online (from November 15 to 22) and at the Palais Brongniart in Paris (November 23) - shareholders, individual investors and managers of large listed groups. This was the opportunity for Veolia to discuss the first step of its merger project with Suez to become the world champion of ecological transformation.
The merger between Veolia and Suez will be completed by the end of the year, once the authorizations are obtained from the European Union. But, according to the CEO of Veolia Antoine Frérot, the most important thing remains to be done: to keep the promise of ecological transformation.
To meet this challenge, we must accelerate the deployment of solutions that already exist and invent those of tomorrow. By combining our two areas of expertise, we can accelerate the recycling of plastics and the reuse of wastewater, which today does not exceed 2% worldwide. We must also speed up energy efficiency wherever possible.
And to invent the other half of the solutions we need for ecological transformation, we will progress faster together. For example, recycling electric vehicle batteries by reusing the lithium, cobalt, nickel and zinc; or improving the air quality in buildings; or capturing and reusing carbon.
Multiplying our innovative strengths and financial resources
This merger multiplies the innovative strengths and financial resources of the new Group. In the environmental services sector, the effect of scale is a key to efficiency. With Suez, Veolia will achieve a 5% market share worldwide. And in this business, concentrations will begin because the needs are increasing.
Chinese competition is fierce because, for the authorities of this country, the environmental problem is now limiting economic growth. Among 5 Chinese companies in our sector, 2 are already moving into export. And the Chinese market is so big that these companies are going to grow very quickly. For example, in rail, in less than 30 years, Alstom has been largely overtaken by the China Railroad Rolling Stock Corporation (CRRC). We can already see that the no. 2 in waste in Germany is Chinese, just like the Issy-les-Moulineaux waste plant in France.
Co-inventing technological, social, societal and partnership solutions
The success of the ecological transformation will depend on the technological, social, societal and partnership innovations of the Group. Examples: recycled plastic must offer the same guarantees as virgin plastic for bottle manufacturers; to extract metals from end-of-life batteries, with Solvay, Veolia uses the same hydrometallurgy processes as manufacturers of new batteries; treating micropollutants now requires cutting-edge technologies; and in biotechnologies, it takes an average of 8 years between innovation and its deployment on the market. That is why Veolia is building numerous partnerships with start-ups to accelerate its innovation processes.
Antoine Frérot concluded, answering questions from individual shareholders on the merger of Veolia with Suez:
We have an advantage for making this merger a success: the cultures of the two companies are very similar, as are our outlooks on the business and its future. The management teams will be mixed in an equitable manner. By mid-2022, the cultural and managerial aggregation will be completed. And we are giving ourselves 4 years, until 2026, to aggregate our results and extract all the value. To achieve this, I am relying on a broader vision of the company: a company is only successful if it is useful to all its stakeholders. If one of its stakeholders moves away from it, the company is weakened in the long-term. The net earnings per share is not sufficient in my broader vision of the company.
Ecological transformation depends above all on investing
Interviewed on November 18 on the Veolia-Suez merger, Claude Laruelle, Chief Financial Officer at Veolia, presented the schedule and financing of this project:
“On July 30, 2020, Engie put its stake in Suez up for sale. The geographic and business complementarities of Veolia and Suez in water and waste allow a size effect of +35%, the equivalent of 10 years of growth. This merger is a decisive advantage to invent the solutions of tomorrow and face up to the competition. Today, in 18 countries, we have already obtained 11 authorizations. We expect that of Europe in mid-December. Then the AMF will give us a notification for a sale period of Suez shares. And we are planning an exit of Suez from the stock market in February 2022. This financial operation is based on a hybrid debt, on a capital increase of 2.5 billion euros, and on the sale of the assets of the new Suez to Meridiam. It preserves Veolia's investment capacity with a “net debt to Ebitda” ratio which remains less than 3. Indeed, our shareholders want a company that can invest, because ecological transformation depends above all on investing. In addition, the figures of the last 9 months show that we have totally erased the negative impact of the health crisis. ”
More information:
> Acting and committing to ecological transformation
> Together, let's take up the challenge of ecological transformation!
> Replay :
- Speech by Antoine Frérot
- Speech by Claude Laruelle in “Veolia-Suez, a transformative operation at the service of ecological transformation”