Veolia''s $3.5 billion rights issue to fund new acquisitions

13 June 2007

Global leader in environmental services spanning water management, waste management, energy services and public transportation, France''s Veolia Environnement SA, has announced plans to raise €2.6 billion ($3.5 billion / Rs14,931.crore) through a one-for-eight rights issue to raise funds for further acquisitions.

The shares will be offered at €49.70, a 6.5-per cent discount to Veolia''s 11 June closing price of €58.67. The offer will create about 52 million new shares, enabling Veolia to invest €15 billion to €20 billion through 2009 in fresh acquisitions.

Veolia also said it had agreed to pay $788 million for the privately-owned Boston-based heating and cooling business, Thermal North America Inc, which owns the largest portfolio of district heating and cooling networks in the United States.

The acquisition, which values Thermal at 9.5 times forecast Ebitda for 2008 and represents 1.85 times forecast sales of $425 million for the current year, will boost Veolia''s share of the US heating market to about 10 per cent.

"The transaction positions Veolia Environnement in the world''s largest energy services market at a time when higher energy costs and changes in US environmental regulations are expected to create new opportunities," Veolia said in a statement.

It also said that it expected double-digit sales growth in its US energy business over the next five years.