At the time of the actual merger in 1997, the managers of both Suez and Lyonnaise saw different advantages in terms of major synergies, considering the current situation in their business sectors and their long-term strategic goals. Some of their arguments were:
1. There was little competition between them in the domestic markets, France and Belgium, so there will be no direct cannibalization of revenues in their strongest markets
2. Both companies had a common strategy of pursuing internationalization, and this was in alignment with their goal of achieving high revenue growth internationally
3. In the international market, they had a complementary geographic presence and this will help them quickly gain dominant market share in various parts of the globe
4. Both companies offered complementary services, meaning that they would be able to create operational synergies for the public utilities business as well as for the industrial customers
5. The merger offered a financial synergy that would help in the overall group growth, as Suez had a “healthy” liquidity while Lyonnaise, after restructuring, had a relatively high debt ratio
This merger was primarily a horizontal integration (waste and communication divisions are some examples) as most of the revenues would be derived from businesses that were competing in the same industry. There was in part a vertical integration for other divisions (for example water, energy and construction) as they were not working in the same industry level but could