GDF Suez to End Suez Environnement Investor Pact After 4 Years

GDF Suez SA said it won’t reduce its stake in Suez Environnement SA even though an investor pact ensuring control of the water company won’t be renewed.

The shareholders agreement, due to expire in July, will lapse, representing “a major change for Suez Environnement,” GDF Suez said today in a statement before an investor conference tomorrow.

“The group reaffirms its willingness to remain both a long-term strategic partner and the reference shareholder,” it said. “GDF Suez has no intention to reduce its stake.”

GDF Suez’s 34 percent stake in Suez Environnement, whose largest competitor in Europe is Veolia Environnement SA, stems from a 2008 merger between nuclear utility Suez SA and state-controlled Gaz de France SA to create GDF Suez. During Chief Executive Officer Gerard Mestrallet’s battle to push through that deal, he fought to keep a controlling stake in Suez Environnement backed by a five-year shareholder accord.

Under the pact, a group of investors controlling about 12 percent of Suez Environnement have first refusal on holdings offered for sale. The group includes Areva SA, Caisse des Depots et Consignations, Belgian billionaire Albert Frere’s Groupe Bruxelles Lambert SA, Group CNP Assurances and Sofina.

The lapsing of the pact will mean GDF Suez can switch its accounting treatment of GDF Suez from a full consolidation of Suez Environnement to an equity consolidation, the company said. GDF Suez announced separately a target to lower debt by one third in two years.

Suez Environnement’s governance will be changed including a cut to the number of GDF Suez directors, the water utility said in a separate statement. Gerard Mestrallet will remain chairman and some employees of the water utility may be added to the board, it said.

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