Suez Could Benefit From the Hedge Fund Tug Boats
A deal for the French water company is blocked by a poison pill on one side and a cheap price on the other. Investors should push for both to change.
Nothing a tug boat can’t nudge toward a deal.
It’s nearly seven months into the attempted hostile takeover of Suez SA, the French water group whose history dates back to the construction of the Suez Canal, and the potential deal is still stuck. There is a way to unlock a transaction, but it would benefit from pressure from investors acting as the tug boats.
Suitor Veolia Environnement SA tried to bag a bargain when it embarked on its pursuit last August, instead of negotiating a friendly transaction by making an offer Suez couldn’t refuse. The Paris-based utility first secured a 29.9% blocking stake, paying 3.4 billion euros ($4 billion). In February, Chief Executive Antoine Frerot followed that up with a hostile bid for the rest of the company — at the exact same valuation of 18 euros a share.