A breakdown in relations presages the battle to come. the prize is french water and waste group suez and chief executive bertrand camus is not going down without a fight. rival veolia wants to absorb suez and create a national champion. the opening shots of veolias campaign headed by antoine frrot may hit their target on wednesday. that is when the board of engie, a major shareholder, will decide whether to go ahead with the sale of 29.9 per cent of suez to veolia.

That would pave the way for a tender for the remainder of suez shares, and the start of a lengthy antitrust investigation. engies chairman jean-pierre clamadieu voiced approval of the combination at parliamentary hearings tuesday. the french state, which has holdings in engie and veolia, has also given tacit approval. requests by engie for a fuller price make an improvement on veolias initial 15.5 offer likely. a higher price will be difficult to reject.

A rival buyer for engies stake is one life of defence that could be a solution to the hostile approach. suez chairman philippe varin has been unable to find one, asking for more time. the transfer of suezs french water assets to a dutch foundation is a last ditch measure to dissuade veolia. undoing the poison pill move requires the full backing of suezs board. hedge funds claim it is a violation of shareholders rights. they may not get the pop in share prices they desire.

The sale of the stake to veolia without firm commitments to remaining shareholders in suez is the concern. the long competition investigation that would follow could change the deals assumptions. contract tenders and renewals will become more challenging for suez with its biggest rival hanging over it. a deal that aims to make the world a cleaner place has turned into a messy squabble. an offer to all suez shareholders would be one way to clear the air.

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