(Bloomberg) — Suez SA agreed to sell its Australian business to Cleanaway Waste Management Ltd., with completion conditional on further talks about its own takeover by Veolia Environnement SA.Suez signed a deal to sell its recycling and recovery business in Australia to Melbourne-based Cleanaway for A$2.5 billion ($1.9 billion), the French water and waste-treatment firm said in a statement Tuesday. Under the terms, Suez can terminate the deal by May 6 if it gets taken over by Veolia, Cleanaway said in a filing.The arrangement leaves room for Suez to maneuver its own fate in its seven-month battle to convince shareholders that Veolia’s takeover offer is too low. Veolia bought almost 30% of Suez in October with a plan to absorb the whole company and create a new global leader in the sector.“We’re continuing to seek a friendly, negotiated solution with Veolia” with the aim of finding a solution by April 20, Suez Chairman Philippe Varin said on a conference call Tuesday. The valuation of the Suez asset sales, including in Australia, show that Veolia’s takeover offer, which it has resolutely maintained since October, “isn’t sufficient,” he said.Veolia said in a statement that Suez’s agreement to sell the Australian business creates another obstacle to a negotiated solution that will have a “negative impact” on its takeover offer. The company will continue to use “all legal means to prevent the sale of these strategic assets,” according to Veolia’s statement. Poison PillSuez on March 21 put forward a solution that would involve Veolia paying at least 20 euros ($23.63) per share — 2 euros more than its offer — and selling on over half of the company to Ardian SAS and Global Infrastructure Partners. It gave Veolia until April 20 to negotiate on that proposal.Alternatively, Suez wants a 22.50 euros per share bid by May 5, following which it would remove a so-called poison pill that’s meant to deter Veolia.Beyond that date, a legal mechanism has been put in place that would prevent any buyer from selling Suez’s French water assets until September 2024. It’s meant to complicate Veolia’s ability to resolve antitrust concerns after any deal unless it decides to sell its own French water business.Suez shares rose 0.3% in Paris trading, while Veolia was unchanged. Cleanaway surged 16% in Australia.The agreement with Cleanaway values Suez’s Australian assets at 12.9 times 2020 earnings before interest, taxes, depreciation and amortization, the company said. Given that Suez currently trades at about 8.5 times its Ebitda, the Australian deal shows the company is worth more than 20 euros a share, Chief Financial Officer Julian Waldron said.If no agreement is found with Veolia in the coming weeks, other asset sales can’t be ruled out, the Suez chairman said.Veolia or any other company can also make a higher bid for Suez’s Australian assets by April 21. If the deal between Suez and Cleanaway isn’t completed, the Australian utility will still acquire a portfolio of two landfills and five transfer stations in the Sydney region for A$501 million, the companies said.If the Australia deal is completed, it would make Cleanaway among the largest waste treatment operators in the country. It’s still currently searching for a new chief executive after longtime leader Vik Bansal announced plans to step down following an investigation into his workplace conduct.Cleanaway said it plans to raise new equity to partially fund the deal.(Updates with Veolia comment in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.