Engie sells Equans to Bouygues: 5 questions to understand everything about the mega-deal

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It is done. After meeting its board of directors following the close of the stock market, Engie announced, on the night of November 5 to 6, asee Bouygues retained to sell its subsidiary Equans to it.

Specializing in electrical installations, such as heating, air conditioning or ventilation, as well as in mechanics, robotics, digital technology and general services, the company has 74,000 employees in 17 countries and generates nearly 12 billion euros in sales. business.

“The offer was the best in terms of all the criteria selected, including from a financial standpoint”, estimated the energy company in a press release sent shortly after midnight.

For 7.1 billion euros, the listed group, specializing in construction, media and telecoms managed to dismiss Bain Capital and Eiffage, but above all to convince the supplier of gas and electricity as well as its shareholders – foremost among which the State at 24% – of the seriousness of its project. The gallery identified five questions to try to see more clearly.

Engie sells Equans: seven questions to understand an ultra-sensitive issue

1. What obstacles remain to be lifted to finalize the transaction?

From the morning of November 6, 2021, Bouygues decided to finalize the transaction in the second half of 2022. “The transaction has already received the unanimous favorable opinion of the employee representative bodies concerned within the Bouygues group”, the industry giant said in a statement to the press. In other words, it is now the turn of Engie and Equans to consult their employee representative bodies.

At the same time, the operation must still receive the approval of the European Commission and the French, British, American, Canadian and Australian competition authorities, the countries where both Equans and the branch of the Major aux 4 are established. billion euros in sales, Bouygues Energies & Services.

In France and Great Britain, this amount represents a few tens of millions of euros out of the future 16 billion euros of turnover of the joint entity. Absent in the United States, Bouygues holds a few renovation contracts in Toronto and Vancouver (hospitals, mounted police headquarters, etc.) in Canada, as well as at least one photovoltaic power plant in Australia.

2. What consequences for employment?

No cut-to-size sales and zero job cuts for at least five years. This is the double request expressed by the CFDT of Engie. As soon as the board of directors was finished, the union said it wanted to register “Now in the negotiation process with the buyer in order to facilitate the integration of all employees into this future entity”.

Knowing that Equans employs 74,000 people – including 27,000 in France – the merger with the Bouygues Energies & Services branch should lead to “The birth of a team of around 96,000 employees”, calculated the construction, materials and construction giant.

The latter undertakes not to force any departure “For at least five years from the closing date”, to create 10,000 net jobs by 2027 and to recruit 2,000 apprentices by 2025.

Wherever they come from, all the employees concerned should also benefit from the company’s social policy, namely employee shareholding and providence.

3. How are tasks shared between Equans and Bouygues Energies & Services?

One thing is already certain: the former chairman of Vinci Construction, Jérôme Stubler, current CEO of Equans, will become chairman and CEO of the new group, alongside the CEO of Bouygues Energies & Services, Pierre Vanstoflegatte.

Reporting to the group’s CEO, Olivier Roussat, the tandem’s mission is to organize teams, distribute responsibilities and initiate reflection on brands and companies.

On the one hand, Bouygues Energies & Services presents itself as ” specializing in the telecommunications, transport and energy-related infrastructure markets, as well as in facility management and industrial and building maintenance ”. Alongside other private actors, the branch is in fact co-piloting the smart city of the Dijon metropolis.

On the other hand, Equans believes to be “Well positioned” in the fields of electrical engineering and telecommunications with Ineo, the fields of climatic engineering with Axima, and multi-technical installations with Fabricom. He also proclaims his “Recognized expertise” in public transport, process industries, defense and marine.

Between them, they declare themselves present “In more than twenty countries” worldwide, mainly in Europe before North America, but are also custodians of a network “Dense” in France and Switzerland.

4. What economic and financial objectives for the new pole?

Second French construction group behind Vinci and ahead of Eiffage with more than 34 billion euros in turnover in 2020, Bouygues has always assured that it would file an offer ” independently “ without having to increase its capital.

Unsurprisingly, on November 6, there was therefore talk of an acquisition financed by its own resources and via a bank loan “Totally secure” near “Partner banks” who will be the object, “At term”, bond refinancing.

The listed group cites its financial advisers – Greenhill & Co, Crédit Agricole CIB – as well as KPMG and Marsh as due diligence finance, legal taxation, carve-out, IT, HR, ESG, Compliance on the one hand, due diligence assurances of the other.

Under these conditions, the new Bouygues Energies & Services and Equans division has set itself a margin rate of 5% in the medium term, against 4% to 6% for the competition. By going from 3.8 billion to 16 billion euros in turnover, the entity hopes, for example, to save between 120 and 200 million euros in its purchasing policy from its suppliers.

In reality, the construction, media and telecoms giant hopes to become the second world leader in multi-technical services, just behind its compatriot Vinci Energies. With this acquisition, the new entity will indeed represent the main business of the major and, above all, 30% of its total turnover.

5. What low-carbon strategy?

From february 2020, in the process of Vinci and just before Eiffage, Bouygues is committed to reduce its greenhouse gases by 2030 on scopes 1, 2 and 3, that is to say its direct emissions, its indirect emissions linked to energy consumption and all of its indirect upstream emissions.

Thus, the Bouygues Construction entity, on which the Energy & Services branch still depends, has promised to reduce its 2019 emissions, on scopes 1 and 2, by 40% and 30%, within nine years. And this by making the carbon approach an internal reflex by training teams in climate issues, by reducing emissions linked to travel, “By working on responsible digital”.

Or by dialoguing with its customers to “Think collectively” to the low-carbon transition, by monitoring and reducing the energy consumption of sites and worksites, or by committing to reducing the carbon impact of its purchases, especially on cement.

Especially since during the presentation of the half-year results for 2021, on August 26, the CEO of the group Olivier Roussat repeated it: the amount of dedicated investments will be revealed in February 2022 when the 2021 annual results are presented. Engie wanted to separate from Equans precisely to refocus on its infrastructure and renewable energy production activities.