Suez Environnement Expects Acquisitions in Europe Waste Industry

Suez Environnement (SEV), a French water and waste company, expects acquisitions in the trash-handling industry as valuations drop, and may make purchases itself.

“There are waste assets for sale, maybe more now,” Chief Executive Officer Jean-Louis Chaussade said today in an interview. “Things are moving. Our growth has been mostly organic until now. We’ll see.”

Water and waste utilities in Europe have seen their market values drop as manufacturers shutter factories to survive the economic slowdown, curbing demand for industrial garbage collection. Cheaper valuations may make targets more attractive for companies such as Suez Environnement, whose comments today indicate a purchase may come sooner than previously expected.

Chaussade said in November that the Paris-based utility may bide its time and look to buy assets in about two years. Interest in the industry has since intensified, with billionaire Li Ka-shing’s Cheung Kong Holdings Ltd. (1) and partners agreeing to buy Dutch waste processor AVR Afvalverwerking BV for 943.7 million euros ($1.25 billion) last month.

“There are possibilities all over Europe,” Chaussade said today. “In waste, everything could be bought or sold, the question is at what price, synergies and opportunities.”

Suez Environnement, Europe’s second-biggest water company, today reported a threefold increase in first-half profit and said its waste-handling business may pick up. The utility competes with Paris-based Veolia Environnement SA (VIE) for municipal and industrial water and waste-treatment contracts.

Valuations for waste-handling companies in Europe have dropped “considerably,” according to Chaussade. Five years ago they were hovering at 10 to 12 times earnings before interest, taxes, depreciation and amortization, and are now as low as five.

“Consolidation will take place,” the CEO said.

To contact the reporters on this story: Tara Patel in Paris at tpatel2@bloomberg.net; Caroline Connan in London at cconnan@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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