PARIS/LONDON (Reuters Breakingviews) - Who would have thought that sewage would keep the Parisian investment-banking elite in their Hermès ties? But a hostile bid launched in the lazy days of a pandemic summer by Veolia for control of its waste and water treatment rival Suez, has done precisely that. Some 16 banks are working on the deal, providing utility-like returns which may yet sweeten.
At first glance, the deal is small with Veolia offering 2.9 billion euros for a stake in its quarry held by energy group Engie, in which the French state holds 24%. But it marks the opening salvo in a possible takeover of 10 billion euros Suez. Each of the three has hired consiglieri to crunch numbers, leaving left-outs to scramble - in a best-fees scenario - alternatives for Suez. They could possibly arise from infrastructure or private equity funds.
The aggressor is flanked by two boutiques, Messier Maris and Perella Weinberg, plus balance-sheet heavies Citigroup, HSBC, Bank of America, Morgan Stanley and Credit Agricole. Suez has gone into full scaredy-cat crouch, hiring locals Rothschild and Société Générale, and the brute American force of JPMorgan and Goldman Sachs on defence, and law firm Bredin Prat. Engie has Parisian league-table stalwart Lazard and BNP Paribas, plus Credit Suisse. Barclays is advising President Emmanuel Macron.
Having so many mouths to feed doesn’t necessarily translate into a feast. Assuming fees equate to a best-case 1% of the offer, then Veolia’s seven advisors could net some 4 million euros each – enough for new Hermès ties but not a new wardrobe at Cifonelli. Plus, there are lawyers to pay: Cleary Gottlieb, Peltier Juvigny Marpeau, Hogan Lovells, Gide and Flichy Grangé. And Deloitte, which is working on antitrust matters.
The sector could use some help. Heavy recruiting by boutiques such as Centerview – whose rainmaker-in-chief Matthieu Pigasse just snagged a role assisting Engie - was predicated on businesses moving from London post-Brexit and more privatisations. But the plague has nixed deal-flow: Dealogic reckons local M&A has generated some 422 million euros in net fees this year, roughly half of last year’s volumes.
That could change if the Veolia offer for Engie’s stake is a mere amuse-bouche for a full takeover of Suez. It may be a lousy year, and an unglamorous business, but the bankers of Paris will still be looking sharp when it’s over.
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