Suez, trying to fence off Veolia, puts its French water business in a foundation


PARIS, Sept 23 (Reuters) - French utility Suez SEVI.PA, fighting a hostile bid from local rival Veolia VIE.PA, said on Wednesday it had given a newly created foundation the mission to preserve the "integrity" of its water business in France.

Veolia last month offered to pay 2.9 billion euros ($3.38 billion) for a 29.9% stake in Suez owned by Engie ENGIE.PA, with a view to subsequently taking full control of Suez by buying up more shares.

Anticipating possible antitrust hurdles, Veolia has already said it would sell Suez's French water activities to Meridiam Infrastructure if the acquisition goes through to preserve competition and employment.

"The board of directors (has) decided, in the context of Veolia's hostile project, that the sustainability of Suez Water France within Suez group was to be legally protected", Suez said in a statement.

The foundation put in place to protect Suez Water France will be managed by a majority of representatives or former representatives of Suez' employees, the group added.

Philippe Varin, chairman of Suez' board of directors, told reporters this foundation did not prevent a takeover offer on the company.

In its statement, Suez also said it would "examine how to open Suez Water France's share capital to the employees of this company" given their commitment to the business.

Earlier in the day, Varin told a hearing at the French National Assembly Suez needed some time to prepare alternatives to Veolia's offer.

($1 = 0.8579 euros)

(Reporting by Benjamin Mallet; Writing by Benoit Van Overstraeten; Editing by Marguerita Choy)

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