* Deal subject to negotiations on takeover bid for Suez by Veolia
* Cleanaway shares rise over 15% on news (Adds Veolia's reaction to deal)
By Shruti Sonal
April 6 (Reuters) - Australia's Cleanaway Waste Management (NYSE:WM) CWY.AX said on Tuesday it would acquire the local recycling and recovery business of French firm Suez SEVI.PA for A$2.52 billion ($1.93 billion), a deal that is expected to draw fresh ire in a takeover tussle for the latter.
Paris-based Suez in February rejected an 11.3 billion euros ($13.35 billion) takeover bid by domestic rival Veolia VIE.PA . Since then, the two companies have struggled to agree how to carve up the waste and water management company's business and have clashed in court over it. on Tuesday blamed Suez for its plan to sell its waste business in Australia, stating the business was strategic.
The company said it would continue to use all legal ways to prevent the sale.
Last week, Suez said Veolia had initiated legal actions against it and Cleanaway in France and Australia over the sale of its assets. deal is also set to pave the way for consolidation in Australia, with IBISWorld analysts estimating that Cleanaway, Suez and Veolia hold the top three largest market shares in the solid waste collection industry in the country.
Suez may terminate the sale by May 6 if it reaches an agreement in principle for a takeover of the firm by Veolia, the companies said on Tuesday. In such a scenario, Cleanaway will instead buy a portfolio of Suez's post-collection assets in Sydney for A$501 million.
In case a superior offer for the assets is made and not matched by Cleanaway, then Suez may terminate the deal earlier.
The business includes several infrastructure assets of Suez, a workforce of more than 2,000 and a fleet of over 1,000 vehicles, Cleanaway said. It has been in talks with Suez for buying its local assets since March. shares climbed more than 15%.
In a separate statement, Suez said it continues to seek a friendly, negotiated solution with Veolia and is "leaving the door open" for negotiations for a global agreement. = 1.3067 Australian dollars) ($1 = 0.8466 euros)