Filing of the Proposed Cash Tender Offer for the Shares of Suez Initiated by Veolia

Presented by: Crédit Agricole Corporate & Investment Bank, HSBC, Morgan Stanley, Bank of America

Veolia is also advised by: Messier & Associés, P/W/P, BNP Paribas, Deutsche Bank, Citi

PARIS–(BUSINESS WIRE)–Regulatory News:

Veolia Environnement (Paris:VIE):

Terms of the Offer

€20.50 per Suez share (cum dividend)¹

Offer period

The timetable for the Offer will be set out by the AMF in accordance with its General Regulation

This news release was prepared and released in accordance with the provisions of Article 231-16 of the AMF General Regulation

THE OFFER AND THE DRAFT OFFER DOCUMENT REMAIN SUBJECT TO REVIEW BY THE AMF

Important notice

In the event the number of shares not tendered in the Offer by the minority shareholders of Suez does not represent, following the Offer, or, if applicable, of the Reopened Offer, more than 10% of the share capital and voting rights of Suez, Veolia intends, within a period of ten (10) trading days from the publication of the notice announcing the result of the Offer or, if applicable, at the latest within three (3) months following the closing of the Reopened Offer, in accordance with Article L. 433-4 II of the French Monetary and Financial Code and Articles 232-4 and 237-1 to 237-10 of the AMF General Regulation, to implement a squeeze-out to acquire the Suez shares not tendered in the Offer in exchange for compensation equal to the Offer price, after adjustments, where applicable.

The Draft Offer Document must be read together with all other documents published in relation to the Offer. In particular, in accordance with Article 231-28 of the AMF General Regulation, a description of the legal, financial and accounting characteristics of Veolia will be made available to the public no later than the day preceding the opening of the Offer. A press release will be issued to inform the public of the manner in which the information will be made available.

This Draft Offer Document is available on the websites of the AMF (www.amf-france.org) and Veolia (www.veolia.com) and may be obtained free of charge from:

Veolia Environnement
21, rue La Boétie
75008 Paris
France
or
30, rue Madeleine Vionnet
93300 Aubervilliers
France
Crédit Agricole Corporate and Investment Bank		HSBC Continental Europe
12, place des États-Unis		38, avenue Kléber
CS 70052, 92547 Montrouge Cedex		75116 Paris
France		France
Morgan Stanley Europe SE		Bank of America Europe DAC (Branch in France)
61, rue de Monceau		51, rue La Boétie
75008 Paris		75008 Paris France
France

1. DESCRIPTION OF THE OFFER

Pursuant to Title III of Book II and more specifically Articles 231-13 and 232-1 et seq. of the General Regulation of the Autorité des marchés financiers (the “AMF”), Veolia Environnement, a limited liability corporation with a board of directors (société anonyme à conseil d’administration), having its registered office at 21, rue La Boétie, 75008 Paris, France, registered with the Paris Trade and Companies Register under number 403 210 032, the shares of which are traded on the Euronext regulated market in Paris (“Euronext Paris”) under ISIN Code FR0000124141 (ticker symbol “VIE”) (“Veolia ” or the “Offeror”), makes an irrevocable offer to the holders of shares of Suez, a limited liability corporation with a board of directors (société anonyme à conseil d’adminisration) having its registered office at Tour CB21, 16, place de l’lris, 92040 Paris La Defense Cedex, France, registered with the Nanterre Trade and Companies Register under number 433 466 570, the shares of which are traded on Euronext Paris (compartment A) and Euronext in Brussels (“Euronext Brussels”) under ISIN Code FR0010613471 (ticker symbol “SEV” on Euronext Paris and “SEVB” on Euronext Brussels) (“Suez” or the “Company”), to acquire all of their Suez shares in the context of a tender offer, the terms and conditions of which are set forth in the draft offer document (the “Draft Offer Document”), and which may be followed by a squeeze-out, if applicable, in accordance with the provisions of Articles 237-1 to 237-10 of the AMF General Regulation (the “Offer”).

The Offer price is €20.50 per share (cum dividend)². The Offer price has been increased from the initial price of €18 per share (cum dividend) that appeared in Veolia’s press release of October 5, 2020 regarding its intention to file the proposed Offer,³ which was filed with the AMF on February 8, 2021 by the Presenting Banks, acting on behalf of the Offeror⁴, as described in paragraphs ‎1.1.1, ‎2.1 and ‎2.7 of this news release.

The Offer is for all Suez shares not held by the Offeror⁵:

1. that are currently issued and outstanding, i.e., to the Offeror’s best knowledge as of the date of the Draft Offer Document, a maximum number of 451,529,224 Suez Shares,⁶ and
2. that may be issued prior to the closing of the Offer or the Reopened Offer (as such term is defined in paragraph ‎2.13 below), as a result of the vesting of the free shares granted by Suez (the “Free Shares”), i.e., to the Offeror’s best knowledge as of the date of the Draft Offer Document, a maximum of 550,919 new Suez shares,⁷

altogether representing, to the Offeror’s best knowledge as of the date of the Draft Offer Document, a maximum number of 452,080,143 Suez shares included in the Offer.

It is specified that the tender of American Depository Receipts under ISIN Code US8646912092 (“Suez ADR”) will not be accepted in the Offer or the Reopened Offer, and that the holders of Suez ADRs who wish to tender their securities to the Offer or the Reopened Offer will be first required to exchange them for Suez shares, as indicated in paragraph ‎‎2.5 below.

To the Offeror’s best knowledge, there are no other equity securities, or other financial instruments issued by the Company or rights granted by the Company that could give access, either immediately or in the future, to the share capital or voting rights of the Company.

Crédit Agricole Corporate and Investment Bank, HSBC Continental Europe, Bank of America Europe DAC (branch in France) and Morgan Stanley Europe SE are acting as presenting banks of the Offer in accordance with the provisions of Article 231-13 of the AMF General Regulation (hereinafter referred to together as the “Presenting Banks”). Only Crédit Agricole Corporate and Investment Bank and HSBC Continental Europe guarantee the content and the irrevocable nature of the undertakings made by the Offeror in connection with the Offer.

The Offer is subject to the validity threshold referred to in Article 231-9, I of the AMF General Regulation, as described in more detail in paragraph ‎2.6.1 of this news release.

In addition, as of the date of the Draft Offer Document, the Offer is subject to the condition precedent (as described in paragraph ‎2.6.2 of this news release) of obtaining merger control clearance for the combination from the European Commission, in accordance with Article 6.1.b) of EC Regulation No. 139/2004 of January 20, 2004, it being specified that the Offeror reserves the right to waive this condition precedent, after prior consultation (without right of veto) with Suez.

The Offer is made on a voluntary basis and will be conducted following the standard procedure pursuant to Articles 232-1 et seq. of the AMF General Regulation.

As Suez shares are admitted to negotiation on Euronext Brussels, pursuant to the provisions of Article 4,§4 of the Belgian statute dated April 1, 2007 regarding tender offers in Belgium (loi belge du 1^er avril 2007 relative aux offres publiques d’acquisition), the Offer will be opened in Belgium. In that regard, the Offeror will request the recognition of the offer document by the Belgian financial services and markets authority (autorité belge des services et marchés financiers) pursuant to the provisions of Article 20 of the aforementioned Belgian statute.

1.1 Background and Reasons for the Offer

1.1.1 Background

Following the announcement by Engie on July 31, 2020 of the launch of a strategic review including its stake in Suez, Veolia made a firm offer to Engie on August 30, 2020 for the immediate acquisition of a block of Suez shares held by Engie representing approximately 29.9% of the share capital and voting rights of Suez. This offer, initially made at a price of €15.50 per share (cum dividend), was increased by Veolia on September 30, 2020 to a price of €18 per share (cum dividend). The initial offer and the improved offer were each the subject of a Veolia press release, respectively on August 30 and September 30, 2020, available on the Veolia website (www.veolia.com).

On October 5, 2020, the Board of Directors of Engie accepted Veolia’s improved offer and, prior to the announcement of the Offer, Veolia and Engie entered into a share purchase agreement pursuant to which Veolia acquired from Engie 187,800,000 Suez shares, representing approximately 29.9% of the share capital and voting rights of Suez, at a price of €18 per share (cum dividend) (the “Block Acquisition”), as described in paragraph ‎1.1.3 below. In a press release published on the same day, also available on Veolia’s website (www.veolia.com), Veolia confirmed its intention to file the Offer at the price of €18 per share (cum dividend), as a result of which the AMF noted the start of the pre-offer period.⁸ In the context of the Block Acquisition, Veolia has also made the required declarations of intent and threshold crossing to the AMF and the Company, as described in paragraph ‎1.1.4 below. At that date, the filing of the Offer was expected to take place at the latest upon receipt of the necessary regulatory clearances, within 12 to 18 months, subject to the proposed combination being favorably received by the Suez Board of Directors.

On November 3, 2020, Veolia publicly indicated that this filing would take place as soon as Suez’s board of directors had issued a favorable opinion on the proposed combination and deactivated the mechanism ensuring the inalienability of Suez’s water business in France set up through a foundation under Dutch law. This information, which was intended to accelerate the timetable for filing the Offer, was also the subject of a Veolia press release available on its website (www.veolia.com).

On January 7, 2021, Veolia formally sent its Offer proposal, at a price of €18 per share (cum dividend), to Suez’s Board of Directors. This proposal described in particular all the aspects of the industrial project, the social proposal and the financial conditions proposed by Veolia. The letter addressed to the Suez Board of Directors and the preliminary draft offer document prepared in this context were the subject of a press release by Veolia, available on its website (www.veolia.com), and were made available to the public.

On February 7, 2021, Veolia’s Board of Directors decided to modify the declaration of intent made in the context of the Block Acquisition, by no longer conditioning the filing of the Offer on a favorable response from Suez’s Board of Directors, in accordance with applicable regulations (as described in paragraph ‎1.1.4 below), and to file the Offer with the AMF accordingly.

The Offer, which at the time proposed a price of €18 per share (cum dividend), and the corresponding draft offer document were filed with the AMF on February 8, 2021 by the Presenting Banks, acting on behalf of Veolia, in accordance with the provisions of Article 231-13 of the AMF General Regulation. This filing was the subject of a filing notice from the AMF⁹ and the corresponding draft offer document was made available to the public in accordance with Article 231-16 of the AMF General Regulation.

On April 12, 2021, Veolia and Suez announced that they had reached an agreement in principle (the “Agreement in Principle”) setting out the general principles of a comprehensive and friendly solution for a combination between the two groups. This announcement was made via a joint press release from Veolia and Suez, available on their respective websites (www.veolia.com and www.suez.com).

The Agreement in Principle sets out the main terms and conditions of the combination between Veolia and Suez, in particular:

1. the increase of the Offer price from €18 per share (cum dividend) to €20.50 per share (cum dividend);
2. the reiteration of Veolia’s social commitments for a period of four years from the closing of the Offer;
3. the recommendation of the Offer by the Board of Directors of Suez, subject to obtaining a fairness opinion in accordance with the regulations in force;
4. the creation of a “New Suez”, which would have nearly €7 billion in revenue, made up of assets forming a coherent and sustainable industrial and social entity with real growth potential;
5. the full cooperation of Suez, Veolia and the “New Suez” takeover consortium in obtaining the necessary clearances;
6. the deactivation of the Dutch foundation by Suez, the termination of the asset sale agreements with Cleanaway in Australia, and the withdrawal of Suez and Veolia from ongoing litigations; and
7. the conclusion of the final agreements reflecting the said Agreement in Principle by May 14, 2021 at the latest.

On May 14, 2021, Veolia and Suez entered into a combination agreement (the “Combination Agreement”) and a Memorandum of Understanding (the “MOU”) with Meridiam, Caisse des dépôts et consignations, CNP Assurances and Global Infrastructure Partners (the “Consortium”).

Prior to their conclusion, the Combination Agreement and the Memorandum of Understanding were approved by the Board of Directors of Veolia and the Board of Directors of Suez. The Suez Board of Directors also welcomed the proposed combination of the two groups.

The signing of the Combination Agreement and the Memorandum of Understanding was the subject of a joint press release issued by Veolia and Suez on the same day and available on their respective websites (www.veolia.com and www.suez.com).

The Combination Agreement between Veolia and Suez sets out the terms and conditions for the implementation of the Offer and establishes the general principles for the creation of the “New Suez” through the sale by Suez to the Consortium of its Water and Waste businesses (excluding hazardous waste) in France and certain international assets (the “Perimeter Divestment”). The Combination Agreement contains:

1. the terms and conditions of the Offer, as set out in the Draft Offer Document;
2. the undertaking by Veolia to increase the Offer price from €18 per share (cum dividend) to €20.50 per share (cum dividend) and the filing of the Draft Offer Document, subject to, and concurrently with,the notification of the delivery by the Suez Board of Directors of a reasoned opinion in favor of the Offer, in accordance with Article 231-19 of the AMF General Regulation;
3. the undertaking by Suez to convene its board of directors to give a reasoned opinion on the Offer subject to its fiduciary duties, the opinion of the Suez Group Committee, and the positive conclusion of the independent expert on the fairness of the financial terms of the Offer;
4. the reiteration of Veolia’s social commitments for a period of four years from the first settlement-delivery date of the Offer;
5. the undertaking by Veolia and Suez to cooperate fully in obtaining all necessary regulatory clearances in connection with the Offer and more generally with the combination, including obtaining merger control clearance from the European Commission, described in paragraph ‎2.6.2 of this news release;
6. the guiding principles and draft Memorandum of Understanding in accordance with which the Perimeter Divestment must be prepared and implemented;
7. Veolia and Suez’s commitment to cooperate fully in the preparation and completion of the Perimeter Divestment;
8. the conditions for the deactivation of the Dutch foundation by Suez, and Veolia and Suez’ withdrawal of the ongoing litigation;
9. a customary exclusivity undertaking by Suez in favor of Veolia; and
10. a customary undertaking made by Suez concerning management in the normal course of business.

The Combination Agreement shall terminate on the later of the date of settlement-delivery of the Offer and the date of completion of the Perimeter Divestment, unless it is terminated earlier by mutual agreement of the parties or unilaterally (i) by Veolia if (a) the Board of Directors of Suez recommends a superior offer, (b) Suez fails to perform any of its obligations under the Combination Agreement or (c) the AMF announces the failure of the Offer, and (ii) by Suez if (a) Suez accepts a superior offer, (b) Veolia fails to perform any of its obligations under the Combination Agreement, (c) the Offer is declared non-compliant by the AMF or following a court decision, (d) Veolia withdraws from the Offer or (e) the AMF announces the failure of the Offer. The Combination Agreement will also automatically terminate if the first settlement-delivery of the Offer and the completion of the Disposal of the Perimeter have not occurred by June 30, 2022.

For the purposes of their cooperation in accordance with the terms of the Combination Agreement, Veolia and Suez have also organized an exchange of limited information concerning them through a “data room” procedure, in accordance with the applicable regulations (including the recommendations of the AMF on data room procedures set out in the guide to permanent information and the management of privileged information¹⁰).

The purpose of the Memorandum of Understanding entered into between Veolia, Suez and the Consortium is to provide a framework for the negotiation of the final agreements and to organize the procedures for informing and consulting the relevant employee representative bodies of the Suez group in connection with the Perimeter Divestment.

In accordance with the provisions of the Memorandum of Understanding, the Consortium submitted to Suez and Veolia, on June 27, 2021, a firm and definitive offer under the terms of which the Perimeter Divestment would be carried out for the benefit of a newly created company owned by Meridiam and Global Infrastructure Partners, each holding 40% of the capital, by Caisse des dépôts et consignations holding 12%, and by CNP Assurances holding 8% (the “Consortium Acquisition Vehicle”).

The Perimeter Divestment would include (i) Suez’s Water and Waste operations (excluding hazardous waste) in France, (ii) Suez’s global “Smart & Environmental Solutions” business unit (excluding “SES Spain”, “SES Aguas Andinas” and part of “SES Colombia”), (iii) Suez’s Municipal Water operations in Italy, as well as its stake in ACEA, (iv) Suez’s Municipal Water operations in the Czech Republic, (v) Suez’s Municipal Water and Waste (except hazardous waste) activities in Africa, as well as its stake in Lydec, (vi) Suez’s Municipal Water activities in India, Bangladesh and Sri Lanka, (vii) Suez’s Municipal Water, Industrial Water and Infrastructure Design and Construction activities in China as well as all of the activities of the Suyu group and two industrial incinerators in Shanghai and Suzhou, (viii) Suez’s Municipal Water activities in Australia, and (ix) Suez’s activities in Uzbekistan, Azerbaijan, Turkmenistan and Kazakhstan.

The Consortium’s offer values the Perimeter Divestment at between €9.5 billion and €9.8 billion in enterprise value, resulting in an equity value of between €8.8 billion and €9.1 billion, based on an earn-out amounting to a maximum of 300 million determined according to the level of EBITDA achieved by the divested business at the end of the 2021 financial year, and taking into account the amount of 578 million euros recognized as of December 31, 2020 under IFRS 16. The sale price may also be subject to adjustments, upwards or downwards, as usually determined on the basis of financial statements prepared as of the completion date or linked to possible changes in the scope of the divested perimeter until the completion date.

The completion of the Perimeter Divestment would nevertheless be subject to (i) certain reorganizations relating to the divested perimeter, (ii) the transfer to the Consortium of at least 90 % of the revenues of the divested perimeter, and (iii) the settlement of the Offer. As a result, the divestment transaction may not be completed if one of these conditions precedent is not met.

Following the submission of the firm and final offer of the Consortium, the Consortium Acquisition vehicle, Suez and Veolia have signed a Put Option Agreement (the “Put Option Agreement“), to which is annexed a share and asset purchase agreement and pursuant to which the Consortium Acquisition Vehicle has granted a promise to purchase relating to the Perimeter Divestment, which may be exercised by Suez as soon as the information and consultation procedures with the relevant employee representative bodies of the Suez group are completed.

The Consortium’s offer also provides for employee shareholding to be increased to 10% of the capital within seven years of the completion of the Perimeter Divestment.

On June 29, 2021, in accordance with Article 231-19 of the AMF General Regulation, and having acknowledged the opinion of the Suez Group Committee on the Offer dated June 21, 2021 and the report of the independent expert, Finexsi, on the financial terms of the Offer dated June 29, 2021, the Board of Directors of Suez considered that the Offer was in the interest of Suez, its shareholders and its employees and recommended to the shareholders to tender their Suez shares to the Offer. It being specified that the report of the independent expert concluded that the Offer price is fair from a financial standpoint for Suez’s shareholders.

In accordance with the terms of the Combination Agreement, Veolia consequently decided to increase the Offer price from €18 per share (cum dividend) to €20.50 per share (cum dividend) and has instructed the Presenting Banks, acting on behalf of the Offeror, to inform the AMF of the said price increase and to file the Draft Offer Document.

1.1.2 Suez Shares held by the Offeror

As at the date of the Draft Offer Document, the Offeror holds 187,810,000 shares and voting rights in the Company, representing, to the best of the Offeror’s knowledge, 29.38% of the share capital and voting rights of the Company.¹¹

These shares were acquired as follows:

• 100 shares were acquired on the market on January 28, 2016 at a price of €17.01 per share (cum dividend);
• 9,900 shares were acquired on the market on March 26, 2019 at a price of €11.70 per share (cum dividend); and
• 187,800,000 shares were acquired off-market on October 6, 2020 in the context of the Block Acquisition described in paragraphs ‎1.1.1 and ‎1.1.3.

1.1.3 Acquisition of the Block of Suez Shares by the Offeror

On October 5, 2020, prior to the announcement of the Offer, Veolia and Engie entered into share purchase agreement pursuant to which Veolia acquired 187,800,000 Suez shares from Engie. The effective completion of the Block Acquisition, entailing the transfer of ownership of the Suez shares to Veolia, occurred on October 6, 2020. The Block Acquisition was disclosed through required threshold crossing notifications and declarations of intents to the AMF and the Company, as specified in paragraph ‎1.1.4 below.

The Block Acquisition was made at a price of €18 per share (cum dividend). Under the terms of the share purchase agreement, Engie benefits from a top-up right in the event that the market receives an improved offer from Veolia, thus allowing Engie to benefit from the increase of the Offer price to €20.50 euros (cum dividend). This additional top-up right would be equal, for each share sold in the context of the Block Acquisition, to the difference between the price per share paid in the Offer and the price per share paid in the context of the Block Acquisition. The payment would take place, subject to the successful completion of the Offer, within five (5) business days following the settlement-delivery of the Offer.

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