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UPDATE 3-Suez to control Spain's Agbar after $4.5 bln deal

Published 10/22/2009, 06:50 AM
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* Criteria, Suez to launch delisting tender bid for Agbar

* Delisting offer to be launched at 20 euros/share

* Suez to control 75 percent of Agbar after delisting

* Criteria to get Agbar's stake in insurer Adeslas

* Suez shares up 1.9 percent, Agbar up 8.6 percent

(Adds analyst comment, detail)

By Tracy Rucinski and James Regan

MADRID/PARIS, Oct 22 (Reuters) - France's Suez Environment will take control of Barcelona-based Agbar to become the leading player in Spain's water sector, in a deal that values Agbar at 3 billion euros ($4.5 billion).

The world's second-largest environmental services group said its share of Agbar would rise to 75 percent from just under 50 percent after a complex transaction with Spanish holding company Criteria.

Under the deal, Criteria will swap up to 25 percent of its Agbar's stake in exchange for the water firm's 55 percent of Spanish health insurer Adeslas, consolidating its position in the insurance sector.

Agbar's shares, which had been suspended before the market started trading, jumped 8.34 percent to 19.75 euros by 0922 GMT.

Suez shares were 1.3 percent higher by 0908 GMT, one of only three gainers on a 1.5 percent weaker French benchmark CAC 40 index.

"This deal makes a lot of sense from a strategic point of view and seems to create value (for Suez)," Oddo Securities analysts wrote in a note.

Agbar is the leading water company in Spain and is also present in Chile, the UK, China, Colombia, Algeria, Cuba and Mexico, with over 27 million clients. In 2008 it reported total revenue of 3.1 billion euros and an operating profit of 437 million euros.

"This transaction provides us with leading international positions, fitting with Suez Environment's own footholds, in markets like the UK, Chile, Mexico, China or Algeria," Jean- Louis Chaussade, chief executive of Suez Environment, said in a statement.

Suez and Criteria will launch a cash tender to delist Agbar shares at 20 euros, a premium to their 18.23 euro close on Wednesday, after which Suez will raise its stake to 75 percent.

Criteria is a holding company controlled by La Caixa, Spain's largest unlisted savings bank, with close links to the government of the region of Catalonia.

Suez sees 20-30 million euros of annual synergies in earnings before interest, tax, depreciation and amortisation, boosting EBITDA by around 10 percent per year.

Its consolidated net debt will increase by about 1.2 billion euros.

Suez and Criteria expect to close the deal by the middle of 2010 following Agbar's delisting in the first quarter.

Criteria plans to retain up to 25 percent of Agbar, and will also buy French insurer Malakoff Mederic's 45 percent of Adeslas to take full control of the insurance company.

Its net cash investment in the two deals will range from 338 million to 546 million euros, it said.

"The sale of Agbar and the purchase of Adeslas make sense for Criteria and brings to a close a year of speculation that the deal would be done," an analyst in Spain said. (Reporting by Tracy Rucinski and James Regan; Editing by Will Waterman and Rupert Winchester) ($1=.6697 Euro)

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