Suez finalizes GE Water deal, confirms synergy targets

PARIS (Reuters) - French waste and water group Suez SEVI.PA said on Monday it had finalised its 3.2 billion euros ($3.4 billion) acquisition of GE Water, and confirmed its synergy outlook for the deal.

Chief executive Jean-Louis Chaussade said the new Suez industrial water unit, which will combine the activities of GE Water and the previous Suez industrial water business, will have revenues of between $2.5 billion to $2.6 billion.

He added that in the next three to five years, synergies should add another $200 million of revenue, although he did not reiterate his May 10 forecast for some $3 billion of revenues in three to four years.

Suez will present its strategy for the new industrial water unit on Dec. 13.

Suez also expects 65 million euros of cost synergies from the GE Water deal and Chaussade said that some 80 percent of the synergies should be realized within three years.

Chaussade said he could not comment on Suez’s earnings guidance so soon before the publication of third-quarter results on Oct. 27, but said there were “no particular concerns”.

Suez shares, which were flat in early session trading, had dropped sharply on Sept. 20 after Credit Suisse analysts wrote that the market had priced in “unrealistic” growth expectations for Suez, and that consensus earnings expectations had consistently been too optimistic.

Credit Suisse lowered its growth projections for each of Suez’s operating segments, taking a more cautious view on the French waste unit and forecasting less international growth.

Suez shares remain up 10 percent so far in 2017, underperforming the shares of its bigger peer Veolia VIE.PA, which are up 21 percent this year.

Reporting by Geert De Clercq; Editing by Sudip Kar-Gupta