- From: Vol 5, Issue 5 (May 2004)
- Category: Need to know
- Region: Unspecified
- Country: Italy and United States
- Related Companies: Acciona, Acea, Aguas de Barcelona, Endesa, FCC, General Electric/Osmonics, Inditex, ITT Industries, Sacyr, Siemens, Suez, US Filter and Veolia
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Siemens’ $993 million acquisition of US Filter’s systems and services businesses brings another heavyweight industrial into the water equipment market to compete alongside ITT and GE.
The markets seemed to think that Veolia had got the best of the deal, marking its share price up by 2.8%, while Siemens’ price fell by 1.6%. The Filter businesses, with a turnover of $1.2 billion and 5,800 on the payroll, treble Siemens’ exposure to the water sector, which is currently limited to some water treatment activities in Germany and international involvement in process control and pump engineering. The membrane technologies – including Memcor – and the biological technologies businesses are included in the sale, alongside the related service businesses. The person most pleased with the deal is US Filter’s chief executive Andy Seidel. He is joining Siemens as part of the deal (see story, p8).
With the Filter sale more or less in the bag, Veolia is now having second thoughts about selling its interest in Spanish construction company FCC. It has rejected the offer made by Esther Koplowitz for the 49% of the shares that the French group owns in the B1998 holding company, which controls Spanish construction giant FCC. According to chief executive Henri Proglio, Veolia is considering remaining in FCC if no better offer is forthcoming.
“My desire clearly is to remain in Spain”, he told Le Figaro, “but if the only option is to leave FCC with a handsome profit I will be happy with that outcome as well”. Veolia’s shares in FCC have a market value of €958 million. Price is not the only issue in the negotiations.
Veolia has hinted that changes to Spanish law may have invalidated the pact between the French group and Koplowitz which, if proved true, would change the balance of power in the battle for control of FCC. The French group are due to meet shortly with Acciona, the Spanish constructor which owns a 14% stake in FCC and which aspires to effecting a full-scale merger between the two companies.
The other major deal in the Spanish corporate sector – the sale of Endesa’s stake in Agbar – has brought Juan Abelló (6%), vice president of Sacyr, the construction firm, and Ignacio Ortega (5%), owner of the textile firm Inditex, into the company. They are both expected to have seats on the board and the overall result has been seen (by the financial paper 5 Dias) as a strengthening of Suez’s position as the dominant force in Agbar. As financial investors rather than trade buyers, they are thought not to have an agenda for the management of the company.
Over in Italy, Acea has taken steps to ensure its minority shareholders get a better deal. The water and electricity utility is 51% owned by the Rome municipality, but it had capped the voting rights of other shareholders at 3%, so that a shareholder with more than 3% of the shares would have no more than 3% of the voting rights. An amendment in the company’s articles of association has raised the cap to 10%.
The 3% limit effectively deterred shareholders from investing more than small amounts in the company, and was considered at least in part responsible for Acea’s lacklustre performance on the stock market since it was listed in 1999. Not everyone is happy with the amendment.
The association of small shareholders criticised the move, saying it would limit their influence even further. Acea closed 2003 with a net profit of €58.9 million, against a loss of €108 million the previous year, mainly related to clearing the debts deriving from its unsuccessful attempted expansion into the telecoms sector.