Veolia boosted by new contracts

Enel was frustrated when Veolia lost interest in Suez

French firm Veolia, the world's largest water company, has seen its 2005 net profits rise by 59% due to new contracts and further expansion plans.

The firm's lower than expected net profits rose to 623m euros (£430) in 2005 from 392m euros the year before.

Veolia's chief executive Henri Proglio said the company was keen on expansion, but rejected the idea of a takeover.

The statement followed Veolia's mooted bid for part of French utility company Suez.

Merger talks

Italian utility company Enel says Veolia had expressed an interest in cooperating in a bid for rival Suez by offering to purchase its water assets.

But Veolia later withdrew from such discussions and Enel is now seeking a new partner to make a new offer.

"If the question is, 'are we interested in the services and environment assets available in the world', then the answer is yes," Mr Proglio stated during a press conference.

"[But] if the question is, 'do we want to associate ourselves with a takeover bid', I've already answered. The answer is no."

Giant firm

Though Veolia acknowledged that it considered the deal, it rejected the assertion that it stopped taking the deal further because it was pressurised to do so.

If the question is, do we want to associate ourselves with a takeover bid, I've already answered. The answer is no Henri Proglio, Chief Executive, Veolia

The European Commission has written to the French government with concerns that France tried to stop the Italian deal by encouraging a merger between Suez and state run Gaz de France instead.

This move came after both Enel and the Italian government made complaints.

A tie up between the two French companies would create an estimated 72 billion euros business.

Analysts say Veolia needs to further clarify its expansion plans following the Enel case.