Suez targets industrial water with $3.4 billion GE Water deal

Wed Mar 8, 2017 2:03pm EST
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By Geert De Clercq

PARIS (Reuters) - French waste and water group Suez has boosted its industrial water treatment business with the 3.2 billion euros ($3.4 billion) acquisition of GE Water from General Electric (GE.N: Quote).

The deal will give Suez access to most major industries globally, including food and beverage, oil and gas, power, mining, pharmaceuticals, and micro-electronics and will make it a supplier to blue-chip companies such as Exxon-Mobil, Total, Shell, BASF, Nestle, Cargill, Intel, Samsung and Pfizer.

Chief Executive Jean-Louis Chaussade told reporters on Wednesday the industrial water market was more important than Suez's traditional municipal water market, because industry accounts for 15-20 percent of global water consumption compared with just 5-8 percent for human consumption in cities.

In an all-cash deal, Suez (SEVI.PA: Quote) and Canadian fund Caisse de dépôt et placement du Québec (CDPQ) will acquire 100 percent of GE Water's equity and debt through a 70/30 joint venture, to which Suez will contribute its existing industrial water activities. The new business will operate under the Suez brand.

The business will have revenue of about 2 billion euros, compared with Suez's 2016 revenue of 15.3 billion euros, and will employ 10,000 people, of which 7,500 will come from GE.

The industrial water market is worth about 95 billion euros globally and grows about 5 percent per year, Chaussade said.

Chaussade said there had been several rounds of bidding for GE Water, but believed that in the third and final round it was up against U.S. fund Clayton, Dubilier & Rice.

Suez has secured bridge financing for the deal, and may refinance it with a 750 million euro capital increase.   Continued...