Veolia Drops Plan For Vinci Tie-Up
By GREG KELLER
June 17, 2006 3:15 p.m.
PARIS -- French water utility Veolia Environnement SA said Saturday it
was dropping plans to pursue a friendly merger with French
construction and concessions giant Vinci SA, only three days after
Veolia's board authorized its chairman to study the proposed tie-up.
Veolia, the world's largest water utility by revenue, said that "in
view of the positions taken by Vinci's management, Veolia
Environnement considers that the conditions are not met to go ahead
with a friendly alliance between the two groups."
As recently as Friday, Veolia had argued the tie-up would add €700
million a year to earnings before interest, taxes, depreciation and
amortization after three years.
Veolia also argued that a merged company "would be ideally positioned
to benefit from the strong growth in the markets for environmental
services and infrastructure, particularly in view of the increasing
importance of public-private partnerships."
However, Vinci wasted no time rejecting the proposal, saying it lacked
any strategic interest or possibility of creating synergies.
In its statement, Veolia also said it confirms its short and
medium-term growth prospects.
The company "is forecasting growth of more than 10% in revenue and a
sharper rise in operating income, in line with the group's development
strategy based on promising markets in environmental services."