Suez has signed an agreement with the parent company of supermarket chain Lidl, which will see “exclusive negotiations” take place for the sale of Suez Recycling & Recovery operations in the Netherlands, Luxembourg, Germany and Poland.
In an announcement yesterday (16 September), Suez said it will be entering into a strategic partnership of intent with PreZero, the environmental services division of Europe’s largest retailer Schwarz Group, which owns the Lidl and Kaufland brands.
Suez has entered into negotiations to sell its recycling and recovery options in four European countries
PreZero describes itself as a “recycling solutions” company, and has operations in Europe and the US, employing nearly 4,000 people.
According to the statement, the transaction is expected to be completed in Q1 2021, subject to regulatory approval and customary closing conditions. It has been valued at €1.1 billion.
The two companies have also entered into a memorandum of understanding “to explore possibilities to develop strategic partnerships promoting innovative waste management solutions to accelerate the development of the circular economy in Europe”.
The negotiations – which Suez says “paves the way for new opportunities and further partnerships” between the two companies – will not include plastic recycling and hazardous waste treatment activities. The proposed deal is part of an asset disposal plan developed by Suez.
A PreZero sorting facility on the Continent
Veolia
The announcement comes six days after Suez branded a ‘takeover bid’ from Veolia as “hostile”, saying it was “against the best interests of Suez and all its stakeholders” (see letsrecycle.com story).
French waste management giant Veolia announced on 30 August it had offered €2.9 billion to French utilities firm Engie for its 29.9% stake in Suez (see letsrecycle.com story). Veolia said it then wants to make an offer for the whole of Suez once it has acquired Engie’s shares.
“The divestment does not question the rationale for the merger”
One analyst, Xavier Regnard, equity research analyst at investment bank Bryan, Garnier & Co, told letsrecycle.com that he thought the announcement by Suez would not effect a potential acquisition by Veolia.
“Under pressure from Veolia, Suez accelerated its disposal plan and announced the sale of its waste management activities in Germany, Poland, the Netherlands and Luxembourg. Suez retains its activities in hazardous waste and plastic recycling, which are better aligned,” he said.
Mr Regnard added: “The objective of the merger is to strengthen certain geographic areas. Veolia is particularly interested in Suez’s positions in Northern Europe and Spain. In other words, the divestment does not question the rationale for the merger, the part sold is not the one in which Veolia is interested.”
Operations
Suez said in the statement that it benefits from “leading positions” in the Netherlands, Luxembourg, Germany and Poland which covers the entire waste recycling and recovery value chain.
This includes collection, sorting, processing and treatment. It handles a broad range of waste types (wood, glass, paper, metal) within its 125 sites run by its c.6,700 employees.
According to Suez, in 2019, this generated more than €1 billion in sales and c.€100m adjusted EBITDA.
‘Major step’
Commenting on the transaction, Bertrand Camus, CEO of SUEZ, said: “This project marks a major step in the achievement of our SUEZ 2030 strategic plan, presented last October, which plans to concentrate our forces in France and in Europe, on the activities and geographies where we can deploy our most promising innovations to become the leader in environmental services.
Bertrand Camus, chief executive of Suez
“This transaction is part of our asset rotation program and values the quality of our business portfolio. I am very excited about the opportunity to accelerate the circular economy with our partners at Schwarz Group as part of the Memorandum of Understanding signed. We are confident that, within PreZero, these activities and teams will continue to grow for the benefit of the environment.”
PreZero
PreZero, the environmental division of Schwarz Group, is the sales organisation of GreenCycle. It is described in the statement as “one of the leading companies in waste and recycling management”, with services including waste disposal and collection, sorting, processing and recycling.
The company was founded to manage recyclables from Lidl, Kaufland and Schwarz Production within the Schwarz Group based in Neckarsulm in Baden-Württemberg.
“We are further enhancing the waste stream cycles in order to improve waste and recycling management”
Thomas Kyriakis from PreZero’s executive board commented: “With the contemplated acquisition of Suez’s recycling and recovery businesses in the Netherlands, Luxembourg, Germany and Poland, we are further enhancing the waste stream cycles in order to improve waste and recycling management and reduce the consumption of natural resources.”
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