French firm pours it on
Tuesday, June 29, 1999

The Associated Press
PARIS -- French utilities giant Suez Lyonnaise des Eaux SA has made its second splash of the month in the United States with its move to purchase Nalco Chemical Co., a water-treatment group. The $4.1 billion agreement comes fast on the heels of the deal Suez Lyonnaise made on June 15 to buy Calgon Corp., a water-treatment company based in Pittsburgh.

Nalco shares rose 9 1/16 to close at 51 9/16, having gained about 50 percent in the last three months. Suez Lyonnaise Chairman Gerard Mestrallet said Monday that the company is keenly eyeing other opportunities in the rapidly changing U.S. water sector. The French company also holds a 28 percent stake in United Water Resources of Harrington Park, the former Hackensack Water Co., and has joined with United Water to operate several major municipal water systems around the country. "We want to develop our presence in the United States with local partners and teams," Mestrallet said.

  • Suez Lyonnaise will launch an all-cash offer of $53 a share for the Naperville, Ill.-based Nalco Chemical. The French company plans to merge Nalco with its water-treatment units, Calgon Corp. and Aquazur.

  • The merger will save $100 million over a one-year period and will make it the world leader in water-treatment services, Suez Lyonnaise said in announcing the deal. It still must be confirmed by the board of directors of both companies.

  • Suez Lyonnaise and its main rival, fellow French utility Vivendi SA, are competing fiercely with each other for market share in the United States, where municipalities are launching a wave of privatizations.

  • Vivendi paid $970 million this month to buy Superior Services Inc., a Milwaukee waste-management company. In March, Vivendi paid $6.2 billion for U.S. Filter Corp., a water-treatment concern.

  • Nalco provides on-site services to over 45,000 industrial and commercial customers in more than 120 countries. Its 1999 revenues were expected to be about $1.94 billion.

  • Suez Lyonnaise intends to base its worldwide water treatment operating center in Chicago. The company provides drinking water to 77 million people and waste-water services to 52 million people.

Even after the U.S. purchases, energy remains Suez Lyonnaise's core business, with water second and waste services third, Mestrallet said. "Frankly, I think it will remain the case," he said. "The energy market is changing quickly in the United States and Europe, and we also want to be active in that market."

Copyright 1999 Bergen Record Corp.

Suez Lyonnaise Des Eaux to Acquire Nalco Chemical Company to Become
World's Largest Water Treatment Company

Increases Suez Lyonnaise des Eaux' Water-Related Revenues to Over $7.4 Billion Accretive and Value Created

PARIS/NAPERVILLE, Ill. (BUSINESS WIRE) - Suez Lyonnaise des Eaux (LY: Paris Bourse), a world leader in private infrastructure services and Nalco Chemical Company (NYSE: NLC), the world's largest provider of water treatment services and products, announced a definitive agreement for Nalco to be acquired by Suez Lyonnaise des Eaux in an all-cash transaction of approximately $4.1 billion, or $53 per share.

Under the terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies, Suez Lyonnaise des Eaux will seek to acquire all of the outstanding common shares of Nalco Chemical Company through a tender offer that will commence within five business days.

This acquisition follows Suez Lyonnaise des Eaux' June 15, 1999 announcement of a definitive agreement to acquire Calgon, a Pittsburgh-based water treatment company with annual revenues of close to $300 million.

Nalco Chemical Company, the world's largest water treatment company provides on-site services to over 50,000 industrial and commercial customers in more than 120 countries. For 1999, Nalco Chemical Company expects its revenues, including affiliates, to be approximately $1.94 billion.

Commenting on this transaction, Gerard Mestrallet, Suez Lyonnaise des Eaux' Chief Executive Officer and President of the Executive Board, said, "The acquisition of Nalco Chemical Company fits perfectly into our strategic plan, which emphasizes the international expansion and the integration of our core businesses. As a result of this transaction, Suez Lyonnaise des Eaux' total water-related revenues will exceed $7.4 billion and, the combined company will be in a strong position to serve industrial, middle-market, institutional and process customers that are increasingly requiring comprehensive solutions."

Mr. Mestrallet continued, "Globally, the acquisition of Nalco Chemical Company is another step in our strategy of providing our customers around the world with integrated services in the water, energy and waste sectors. As a global multi-service group, we partner with our customers, enabling them to focus on their core operations. After carefully reviewing the market landscape, we are confident that the people of Nalco Chemical Company share this vision and that our business model will result in an accelerated growth rate for Suez Lyonnaise des Eaux' water treatment business.

Suez Lyonnaise des Eaux expects this transaction to be value creating and immediately accretive to cash flow in the first year and to be accretive to earnings beginning in the second year. The Company expects to realize more than $100 million in cost savings as a result of economies of scale, revenue enhancement and development synergies, and to take full advantage of important cross-selling opportunities.

Edward J. Mooney, Chairman and Chief Executive Officer of Nalco Chemical Company, noted, "We are very pleased with this agreement, which provides substantial value for our shareholders as well as key growth opportunities and benefits for our company and its customers. Our goal at Nalco Chemical Company has been to use our on-site expertise, technical innovation and global presence to improve the profitability of our customers' dynamic and changing operations. As part of the Suez Lyonnaise des Eaux Group, we dramatically increase our ability to provide an expanded array of value-added products and services to our customers.

"We expect the combination of our worldwide market positions, R&D and technical-knowhow to give us a meaningful competitive advantage in the marketplace," Mr. Mooney added.

Suez Lyonnaise des Eaux will base its worldwide water treatment operating center in Naperville, under the direction of Mr. Mooney.

The transaction is subject to customary regulatory approvals in the United States and Europe and is expected to be completed during the third quarter of 1999.

Suez Lyonnaise des Eaux stated that it expects to fund 50% of the all-cash transaction internally, with the remaining 50% financed by a bridge loan that is already in place.

With annual revenues of $32.5 billion, Suez Lyonnaise des Eaux is a world leader in private infrastructure services, with operations in more than 120 countries. The Company is a market leader in the water sector supplying drinking water to 77 million people and providing wastewater services to 52 million people. The Group's three international core business sectors are: energy, water, and waste services.

Headquartered in Naperville, Illinois, outside of Chicago, Nalco Chemical Company employs 7000 people of which about 3600 are engineers and technicians with direct customer contact and 300 are researchers located in 5 R&D centers.