Through its subsidiary, Degrémont, the Suez Lyonnaise des Eaux Group has acquired from Imetal all English China Clays' water treatment activities (Calgon). Calgon (an American company) nº 3 worldwide in water treatment, was purchased for USD 425 million (EUR 405 million/FRF 2.65 billion).

Calgon* generates sales of USD 284 million (EUR 270 million/FRF 1.77 billion) with 1,100 employees serving 6,000 industrial customers. The bulk of its sales is in the United States (86 percent), with the remainder spread among Latin America (8 percent) , Europe (4 percent), and Asia (2 percent).

Commenting on the purchase, Gérard Mestrallet, CEO and President of the Executive Board of the Suez Lyonnaise des Eaux Group said : "This gives us a direct and effective entry in the US market in keeping with our expansion goals in this country, which alone represents half the world's water market" ; he then added : " This acquisition is value creating, accretive right from 2000 and will contribute to the Group's objective to earn EUR 8.5 in net current income per share in 2002".

Water treatment is a water treatment service activity, including the sale of high added-value specialty chemical products. Technically sophisticated, it is characterized by high entry barriers. The business's great diversity of customers, mainly from industry, and its service nature, account for its high rate of recurring sales and income.

Degrémont has been active in this field for the past thirty years. Recently, its water treatment activities were combined within the Degrémont subsidiary Aquazur, Europe's largest home-grown actor in this sector with 1999 sales projected to be be USD 240 million (EUR 230 million/FRF 1.5billion). Aquazur employs 1,500 persons, 600 of whom are engineers and technicians and has portfolio of 8000 industrial customers.

The industrial strengths and synergy resulting from the Calgon-Degrémont tie-up

With this acquisition, Degrémont more than doubles its size in the water treatment sector. The two companies' combined sales total USD 530 million (EUR 505 million/FRF 3.3 billion).

At the same time, the acquisition enables Degrémont to realign its business lines and customer base:
- its service activities, which previously accounted for 34 percent of business, now account for 47 percent, while water treatment engineering passes from 66 percent to 53 percent.
- the weight of industrial customers increases from 35 to 47 percent while that of public sector authorities declines from 66 to 53 percent.

Combining the two companies will produce economies of scale, particularly in the R & D and raw materials purchasing areas.

The two companies are also very complementary from the geographic perspective. Through Aquazur, Degrémont generates 86 percent of its sales in Europe, while Calgon is mainly active in the U.S. market. In addition, Calgon and Degrémont together will be able to combine their forces to expand and develop in the high-growth areas of Asia and Latin America.

The Calgon-Degrémont combination, nº 3 on the world's two main water treatment markets (United States and Europe), will also be well-armed to respond to the worldwide needs of major industrial customers from the centralized purchasing and outsourcing perspectives.

The strategic interest of this transaction from the Suez Lyonnaise des Eaux Group perspective

Through this acquisition, the Suez Lyonnaise des Eaux Group strengthens its position as world leader in water management services, one of the Group's three international core businesses.

It will also expand business with its industrial customer segment, acquiring the means to penetrate the large multinational enterprise market, particularly the major processing industries (paper, petrochemicals, steel, energy production, and sugar refining).

The transaction will be submitted for approval to the relevant anti-trust authorities.

* "Calgon" is a contraction of the slogan "CALcium GONe," inspired by the company's discovery of the world's most widespread anti-tartar product, sodium hexametaphosphate.