Veolia To Sell Suez's U.K. Waste Business at a Price in Line With Our Expectations; Shares Cheap

We maintain our fair value estimate of EUR 30.50 after no-moat Veolia announced that it agreed to sell Suez's U.K. waste business to Macquarie at an attractive price of EUR 2.4 billion, roughly in line with our EUR 2.25 billion estimate. This deal confirms our initial view that the acquisition of Suez would be significantly value-accretive thanks to synergies and antitrust-driven asset sales at multiples higher than the one paid by Veolia to acquire Suez. Veolia shares appear undervalued as the market overestimates the impact of the economic slowdown on the group.