Published in the Asbury Park Press
BLOOMBERG NEWS SERVICE
PARIS -- Suez Lyonnaise des Eaux SA, France's second-largest water company, will buy the rest of United Water Toms River's parent for $1.8 billion in cash and assumed debt, as it tries to match the expansion of bigger rival Vivendi SA.
Paris-based Suez has offered $35 a share for the two-thirds of United Water Resources Inc. that it doesn't own, 13 percent more than Friday's close. Suez also will assume $800 million in debt and preferred stock of the No. 2 U.S. water company.
The Harrington Park, N.J.-based water company has 95,000 customers in the Toms River area, and serves another 25,000 people in Manalapan and Freehold Township through its water wholesaler, United Water-Matchaponix.
Suez Chief Executive Gerard Mestrallet has in the past three days pledged $10.75 billion to buy out minority shareholders in water, power and waste-management companies. Suez yesterday won European Union approval to buy Nalco Chemical Co., the biggest U.S. maker of water-treatment chemicals.
Mestrallet has accelerated the pace of acquisitions after he was criticized for not keeping up with Chief Executive Jean-Marie Messier at Vivendi, the world's top water company by sales. Vivendi, also based in Paris, agreed in April to buy U.S. Filter Corp., a U.S. water-treatment company that owns Culligan Water Technologies, for $7.9 billion.
United Water provides water to 7.5 million people in 19 states and sewage treatment services to many of them. It had sales of $356.2 million last year.
United Water shares rose 2 7/16 yesterday to 33 1/2. Suez shares fell 2.8 euros to 154.1 in Paris, while Vivendi rose 1.05 euros to 70.7.
Mestrallet two years ago pledged to build up Suez's energy, waste and water divisions while selling other units not key to those businesses after the company was formed by the 1997 merger of Cie de Suez and Lyonnaise des Eaux. It's since amassed $11.3 billion and also plans to sell 1 billion euros in bonds and use a 2 billion euro syndicated loan. Suez has so far this year laid out 15.5 billion euros for acquisitions.
Suez, the top water company by number of customers, last week offered to buy the rest of Tractebel SA, Belgium's largest utility, for $8 billion. It would be the biggest cross-border energy purchase in continental Europe.
Also this year, Suez agreed to buy Naperville, Ill.-based Nalco for $4.5 billion, Imetal SA's Calgon unit in Pittsburgh for $425 million and Browning-Ferris Inc.'s stake in Sita SA, Europe's biggest trash hauler, for $444 million.
United Water, through a joint venture with Suez, has been winning contracts to manage large municipal systems such as Atlanta's.
Some analysts have warned that Suez's decision to boost its stake in United Water could backfire. Municipalities accustomed to local control of their water systems may not want to hire a French-owned company to run them, analysts said.
Business writer David P. Willis contributed to this story.
Source: Asbury Park Press
Published: August 24, 1999
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