Filed by: SUEZ
pursuant to Rule 425 under the Securities Act of 1933
Subject Company: SUEZ
Exchange Act File Number: 001-15232
Date: February 28, 2006
Important Information
This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Suez or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gaz de France, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States, Germany, Italy and Japan) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, Gaz de France and Suez disclaim any responsibility or liability for the violation of such restrictions by any person.
The Gaz de France ordinary shares to be issued in connection with the proposed business combination to holders of Suez ordinary shares (including Suez ordinary shares represented by Suez American Depositary Shares) may not be offered or sold in the United States except pursuant to an effective registration statement under the United States Securities Act of 1933, as amended, or pursuant to a valid exemption from registration.
In connection with the proposed business combination, the required information document will be filed with theAutorité des marchés financiers (“AMF”) and, to the extent Gaz de France is required or otherwise decides to register the Gaz de France ordinary shares to be issued in connection with the business combination in the United States, Gaz de France may file with the United States Securities and Exchange Commission (“SEC”), a registration statement on Form F-4, which will include a prospectus. Investors are strongly advised to read the information document filed with the AMF, the registration statement and the prospectus, if and when available, and any other relevant documents filed with the SEC and/or the AMF, as well as any amendments and supplements to those documents, because they will contain important information. If and when filed, investors may obtain free copies of the registration statement, the prospectus as well as other relevant documents filed with the SEC, at the SEC’s web site at (www.sec.gov) and will receive information at an appropriate time on how to obtain these transaction-related documents for free from Gaz de France or its duly designated agent. Investors and holders of Suez securities may obtain free copies of documents filed with the AMF at the AMF’s website at (www.amf-france.org) or directly from Gaz de France on its web site at: (www.gazdefrance.com) or directly from Suez on its website at: (www.suez.com), as the case may be.
Forward-Looking
Statements This communication contains forward-looking information and statements about Gaz de France, Suez and their combined businesses after completion of the proposed business combination. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expect,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although the managements of Gaz de France and Suez believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Gaz de France and Suez ordinary shares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Gaz de France and Suez, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with theAutorité des marchés financiers (“AMF”) made by Gaz de France and Suez, including those listed under “Facteurs de Risques” in theDocument de Base filed by Gaz de France on April 1, 2005 (under no: I.05-037) and in theDocument de Référence and its update filed by Suez on April 14, 2005 (under no: D.05-0429) and September 7 (under no: D.05-0429-A01), respectively, theNote d’opération filed by Suez on September 7, 2005 under no 05-673, and theNote d’opération filed by Suez on November 24, 2005 under no 05-810, as well as under “Risk Factors” in the Annual Report on Form 20-F for 2004 that Suez filed with the SEC on June 29, 2005. Except as required by applicable law, neither Gaz de France nor Suez undertakes any obligation to update any forward-looking information or statements.
THE FOLLOWING IS A COMMUNICATION PRESENTED BY SUEZ AND GAZ DE
FRANCE AT AN INFORMATION MEETING HELD ON FEBRUARY 28, 2006
Information meeting
Creation of a World Leader in Energy and Environment
28th February 2006
Disclaimer
Important Information
This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Suez or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gaz de France, nor shall there be any sale or exchange of securities in any jurisdiction (including the United States, Germany, Italy and Japan) in which such offer, solicitation or sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. The distribution of this communication may, in some countries, be restricted by law or regulation. Accordingly, persons who come into possession of this document should inform themselves of and observe these restrictions. To the fullest extent permitted by applicable law, Gaz de France and Suez disclaim any responsibility or liability for the violation of such restrictions by any person.
The Gaz de France ordinary shares to be issued in connection with the proposed business combination to holders of Suez ordinary shares (including Suez ordinary shares represented by Suez American Depositary Shares) may not be offered or sold in the United States except pursuant to an effective registration statement under the United States Securities Act of 1933, as amended, or pursuant to a valid exemption from registration.
In connection with the proposed business combination, the required information document will be filed with the Autorité des marchés financiers (“AMF”) and, to the extent Gaz de France is required or otherwise decides to register the Gaz de France ordinary shares to be issued in connection with the business combination in the United States, Gaz de France may file with the United States Securities and Exchange Commission (“SEC”), a registration statement on Form F-4, which will include a prospectus. Investors are strongly advised to read the information document filed with the AMF, the registration statement and the prospectus, if and when available, and any other relevant documents filed with the SEC and/or the AMF, as well as any amendments and supplements to those documents, because they will contain important information. If and when filed, investors may obtain free copies of the registration statement, the prospectus as well as other relevant documents filed with the SEC, at the SEC’s web site at (www.sec.gov) and will receive information at an appropriate time on how to obtain these transaction-related documents for free from Gaz de France or its duly designated agent. Investors and holders of Suez securities may obtain free copies of documents filed with the AMF at the AMF’s website at (www.amf-france.org) or directly from Gaz de France on its web site at: (www.gazdefrance.com) or directly from Suez on its website at: (www.suez.com), as the case may be.
Forward-Looking Statements
This communication contains forward-looking information and statements about Gaz de France, Suez and their combined businesses after completion of the proposed business combination. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expect,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. Although the managements of Gaz de France and Suez believe that the expectations reflected in such forward-looking statements are reasonable, investors and holders of Gaz de France and Suez ordinary shares are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Gaz de France and Suez, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with the Autorité des marchés financiers (“AMF”) made by Gaz de France and Suez, including those listed under “Facteurs de Risques” in the Document de Base filed by Gaz de France on April 1, 2005 (under no: I.05-037) and in the Document de Référence and its update filed by Suez on April 14, 2005 (under no: D.05-0429) and September 7 (under no: D.05-0429-A01), respectively, the Note d’opération filed by Suez on September 7, 2005 under no 05-673, and the Note d’opération filed by Suez on November 24, 2005 under no 05-810, as well as under “Risk Factors” in the Annual Report on Form 20-F for 2004 that Suez filed with the SEC on June 29, 2005. Except as required by applicable law, neither Gaz de France nor Suez undertakes any obligation to update any forward-looking information or statements.
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A merger to serve a shared strategic vision
A leader in Energy and Environment
Reinforcement of positions anchored in France and Benelux
High potential for growth in Europe and internationally
Strong synergies in energy businesses
Combined competencies of over 200,000 employees
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Contents
1. Transaction summary
2. An ambitious industrial project
3. A transaction to create value
4. Main transaction terms
5. Conclusion
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1. Transaction summary
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Description of the transaction
Terms
Exceptional dividend of one euro per share to be paid to Suez shareholders before the merger Merger of Suez and Gaz de France based on an exchange ratio of
1 |
| Gaz de France share for 1 Suez share as of merger date |
Transaction approved by the Boards of Directors of Suez and Gaz de France Transaction supported by the major shareholders of Suez and Gaz de France
Public support for the merger from the French and Belgian governments Representatives of major Suez shareholders have advised their respective Boards to retain their holdings in the new entity
Timetable
Forecast date for the closing of the transaction: H2 2006
Authorisations needed: legislative changes and implementation, competition authorities, CPT, Suez and Gaz de France Shareholders’ Meetings Consultation of representative labour organisation
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Corporate Governance principles
The Group will be run by a tandem with Mr. Gérard Mestrallet as President and Chief Executive Officer or President of the Management Board depending upon the organisation of the new Group that will be decided by corporate bodies of both companies, and Mr. Jean-François Cirelli
Management of the Group will be designated on a concerted basis, with equal representation
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A new group ready to address coming challenges in Energy and Environment
CHALLENGES
Securing energy supply
Natural gas Electricity
Gas/Electricity convergence
Promote energy efficiency and related services
Develop infrastructures for the transport and distribution of energy
Respond to environmental requirements (water, waste management)
POSITIONS
No. 1 buyer and supplier of natural gas in Europe
A world leader in LNG
No. 5 producer of electricity in Europe
Diversified production mix
Low CO2 emission production mix
No. 1 world operator in CCGT
European leader in energy services
Advocate of sustainable development
No. 1 network for natural gas transport and distribution in Europe
26 Gm3 in regasification terminals
A world leader in water and waste management services
A World Leader in Energy and Environment
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A merger to serve a shared strategic vision
The transaction is consistent with both groups’ strategic vision
Continuity of existing partnerships Response to increased energy demand A boost in gas/electricity convergence
Reinforcement of the group’s competitive position, benefiting from their geographic anchoring in France and Belgium
A concerted combination of two groups with shared values, committed to sustainable development A significant step in preparing the complete opening of European energy markets
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Key 2004 figures for the two groups
Gaz de France
52,950 employees
No. 1 European supplier of gas
12.5 million natural gas customers 66 Gm3 sold
No. 1 transport network in Europe
31,365 km network
No. 1 distribution network in Europe
174,540 km network
No. 2 LNG terminals operator in Europe
700m bep in reserves and operator in 8 countries
SUEZ
160,700 employees
No. 5 producer of electricity in Europe
Capacity of 58 GW 5.6 million customers
No. 6 European natural gas company
40 Gm3 sold worldwide
20% of the Atlantic LNG market Terminals (Zeebrugge and Boston)
No. 2 supplier of environmental services in Europe
80 million inhabitants served in drinking water 44 million inhabitants served in water treatment 65 million waste services customers
Leading energy services provider in Europe
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Financial profile of the combined entity
Financial profile of the combined entity
In €bn Suez Gaz de France Suez Gaz de France
Revenues 2005 41.5 22.4 63.9
Revenues 2004 38.1 17.5 55.6
EBITDA 2004 6.0 4.21 10.2
Market capitalisation
43.2 29.3 72.5
(spot price as of 24/02/06)
S&P Rating A- AA- > A
Note
1 |
| IFRS accounting, pro forma accounting for change in retirement regime |
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A transaction for the benefit of all stakeholders
In the interest of shareholders
A merger to create value
Providing customer service
Secured energy supply
Multi-energy offering (gas, electricity, services) in a competitive environment Continuation of public service obligations
Respectful of public institutions
Support from the French and Belgian governments
Respectful of commitments announced as part of the Electrabel offer Respectful of commitments given to local authorities
In the interest of employees
A project for increased employment Respect of both groups’ cultures Maintain the « IEG » status
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2. An ambitious industrial project
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An ambitious industrial project
Suez / Gaz de France Merger
Leadership European leader in natural gas, electricity, services and environment
Geographical Geographical anchorage in France and Belgium
complementarity Selective positions internationally Attractive and complementary positioning in Energy, Services
Balanced business portfolio and Environment Competitive businesses (production, supply) Infrastructures
Gas/electricity convergence First tier presence in gas/electricity convergence in Europe
Growth Significant potential based on positions in Europe and in a selected number of strongholds internationally
Know-how Shared values and complementary know-how Technological leadership
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A European utilities leader
Market capitalisation (as of 24/02/06)
In €bn
81 72 66
44 43 41 30 29 25 19 12
EDF
Suez Gaz de France
E.On Enel Suez RwE
Endesa Gaz de France Iberdrola Véolia Gas Natural
2005 revenues
In €bn
63,9
56
51
42 41,5 34
25 22,4 18 12 6
Suez Gaz de France
E.On EDF RwE Suez Enel Veolia Gaz de France Endesa
Iberdrola
Gas Natural
Energy & services Environment Others
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A leader in the natural gas industry
2004 natural gas sales (TWh)
1200 1000 800 600 400 200 0
Suez Gaz de France
Gasunie E.On
ENI Gaz de France Suez
Centrica Gas Natural
RWE
Wintershall
VNG
Norsk Hydro EDF
Enel
LNG sourcing
No. 2 European operator of LNG terminals
Three European LNG terminals
Leader in the Atlantic basin
A significant supplier of LNG in the US Terminals in Zeebrugge, Montoir-de-Bretagne and Boston
A fleet of 16 LNG ships in operation
Regasification capacities of 26 Gm3
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Geographical complementarity
France and Benelux
N°1 in natural gas N°2 in electricity N°1 in energy services N°2 in water and waste management
Southern Europe
N°1 in energy services in Italy Top 3 in water and waste management Significant position in electricity
Atlantic LNG
France and Benelux
Southern Europe
Eastern Europe
Eastern Europe
Top 5 in energy N°2 in energy services N°2 in water and waste management
LNG
Global LNG operator Leader in the Atlantic basin
Anchorage in France and Belgium and strong positions in Europe and internationally
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Global presence
France + Benelux: Revenues 05 of €35.7bn (56%) Rest of Europe: Revenues 05 of €18.8bn (29%)
North America Revenues 05: €4.4bn (7%)
Canada
United States
South America Revenues 05: €2.3bn (4%)
Middle East & Asia Revenues 05: €2.1bn (3%)
China
India
Brazil
Others Revenues 05: €0.6bn (1%)
Thailand
Domestic market Development Strongholds
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Positioned on the entire value chain
Competitive businesses
A unique positioning to benefit from gas/electricity convergence
Gas supply (including E&P)
Electricity production
CCGT Nuclear Hydro Renewables
TRADING
Gas and electricity sales
I & C (Services and industry) Residential Energy services
Gas infrastructures
An energy environment favourable for investment and network expansion
LNG terminals
Transport & Storage
Distribution
Consistent strength
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A competitive production mix
Production mix1
4%
21%
40%
12%
23%
Thermal CCGT
Nuclear Cogeneration
Hydro and wind
Note
1 |
| Capacity by combustion type (2005) |
Flexible and high-performance production assets Competitive energy mix Development of gas-based electrical production
Low CO2 emission portfolio
Business expertise
Active in nuclear production
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Gas/Electricity Convergence
Supply sources1
Others 4%
Spot purchase 18%
Netherlands 21%
Russia 15%
Norway 27%
Algeria 15%
New supply sources:
Libya (2004) Egypt (2005) Qatar (2007) Yemen (2009)
Note
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| Cumulated European supplies, i.e. Distrigaz and Gaz de France |
Downstream presence
As of y/e 2004 Suez Gaz de France
CCGT Capacity (GW) 20
Number of gas customers1 (m) 14.6
Gas sold (TWh) 1,140
Note
1 |
| For Suez, only Electrabel customers |
Strengthened position in relation to main gas suppliers Diversified sourcing geographically and by type
Enhanced sourcing capabilities and increased arbitrage opportunities Leadership position in LNG
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A determined commercial strategy to address customer needs
Reinforced commercial position in multi-utility offering and services A group geared to full market liberalisation in 2007 Leveraged experience acquired in the open commercial market
Unique customer bases
In millions, as of y/e 2004 Suez Gaz de France Suez Gaz de France
No. of electricity customers1 5.6 ns 5.6
No. of gas customers1 2.1 12.5 14.6
No. of drinking water customers 80 — 80
No. of waste services customers 65 — 65
Note
1 |
| For Suez, number of Electrabel customers only |
Recognised brands
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Significant growth potential leveraging existing positions
LNG
Current
Second-ranked operator of LNG terminals Leader in the Atlantic basin 16 LNG ships in operation Regasification capacity of 26 Gm3 Liquefaction plants (Atlantic LNG, Egypt LNG)
Infrastructures
No. 1 transport network in Europe No. 1 distribution network in Europe
Electricity Production
Installed capacity of 58 GW including:
32 GW in Europe 26 GW internationally
Development potential
E&P and liquefaction: extension of existing capacities (Atlantic LNG), projects under construction (Yemen LNG and Snohvit)
Regasification: numerous projects under construction (Fos terminal and extension of Zeebrugge) or planned (Fos, Florida and Boston terminals)
LNG fleet: 6 ships under construction
Reinforcement of transport capacities in France and Belgium Reduction of bottleneck points in France Transport of gas to European markets (BBL; Medgaz) Extension and modernisation of the distribution network
2,000 MW in project stage in France 2,000 MW under construction in Spain and Italy 746 MW under construction in North America 1,590 MW under construction in Middle East and Asia 243 MW under construction in South America Development in Renewables Participation in EPR
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3. A transaction to create value
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A transaction to create value
Operational synergies available in the short term Potential for immediate tax and financial optimisation Long-term, non-quantified synergies at this stage:
Revenue synergies
Further operating costs optimisation Capex optimisation
Other value-enhancement factors:
Key player in utilities
Diversification of regulatory and geographical risks Greater weight in stock indices Increased stock liquidity
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Synergies available in the short term
1. OPERATIONAL SYNERGIES AVAILABLE IN THE SHORT TERM
Sourcing
Portfolio optimisation Reduction in sourcing costs Extended arbitration in LNG
Development of multi-energy offers
Mainly in France A potential for growth in
« Residential » electricity sales in France in 2007
Services
Optimisation of business portfolio
Purchasing synergies (excl. energy)
Operational integration of the combined group Combined purchasing cost reductions
Short-term operational synergies of at least €500m p.a. before tax
(current estimate on a full year basis – full implementation in 2009)
2. POTENTIAL FOR TAX AND FINANCIAL OPTIMISATION
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4. Main transaction terms
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A well-balanced transaction
Exchange ratio: 1 for 1 after an exceptional dividend of €1 per Suez share Exchange ratio close to recent share prices1:
Based on 6-mth average: 0.937 Based on 3-mth average: 1.039 Based on 1-mth average: 1.092
EPS dilution / accretion
EPS accretive on a pro forma2 basis for Suez shareholders Highly EPS accretive on a pro forma2 basis for Gaz de France shareholders
Notes
1 Exchange ratio defined as the ratio between Suez share price and Gaz de France share price –After adjustment to reflect payment of an exceptional €1 dividend per Suez share 2 Pro forma EPS is based on market consensus and includes a number of adjustments:
• Full year impact of synergies
• Before goodwill allocation
• Excluding implementation costs of operational synergies
Pro forma shareholding3
Suez: 56.7% / Gaz de France: 43.3%
1.9% 4.1%
1.9%
1.6%
1.2%
34.6%
56.7 %
43.3 %
53.5%
1.2%
French State Other Crédit Agricole CDC
Gaz de France employees GBL
Suez Employees Areva
Note
3 |
| After cancellation of treasury shares |
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Strict financial discipline
Track record in controlled investment plans
Respect of strict investment criteria consistent with best practices of both groups
Return on capital employed Dilution / accretion Free cash flow generation
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A strong cash flow generation
Visibility and growth due to a balanced asset mix with presence in both regulated and unregulated segments
A cash flow profile allowing dynamic investment and dividend policies
Optimisation of financial structure
Potential for dynamic dividend policy offering a competitive yield Potential for additional return (dividends, share buybacks) Rating target: > A
Medium term objectives
To be announced shortly
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Forecast timetable for the transaction
Forecast timetable for the transaction
Notification of the transaction to the European Commission April 2006 and other relevant authorities Suez and Gaz de France Board of Directors approval End Sept. 2006 of the merger agreement project and signature of merger agreement project Mid October 2006 Filling with the AMF of the merger documentation Registration by market regulation authorities of the merger Mid Nov. 2006 documentation Suez and Gaz de France General Shareholders’ Meetings Mid Dec. 2006 to approve the merger and necessary changes in by-laws
The name of the new Group will be defined before the Shareholders’ Meetings of both Groups approving the merger
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5. Conclusion
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A merger to serve a shared strategic vision
A leader in Energy and Environment Reinforcement of positions anchored in France and Benelux High potential for growth in Europe and internationally Strong synergies in energy businesses Combined competencies of over 200,000 employees
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Information meeting
Creation of a World Leader in Energy and Environment