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UPDATE 1-Suez hits back in takeover fight with promise of $1.2 bln shareholder windfall

(Edits, adds background)

PARIS, Sept 22 (Reuters) - French waste and water management firm Suez, subject of a hostile takeover bid from rival Veolia, on Tuesday said it would hand back more than 1 billion euros ($1.17 billion) to its shareholders by the middle of next year.

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

Engie rejected Veolia’s initial advance but has said it will consider a higher offer for the Suez stake. Suez Chairman Philippe Varin has called the Veolia bid “very hostile”, and said Veolia’s plans for the business were unrealistic.

In a statement released on Tuesday, Suez said that a strategy it launched last year to revamp the company’s performance was delivering results faster than expected, allowing the firm to raise its mid-term financial targets.

“The implementation of Suez’ strategy announced in 2019, is delivering tangible results already this year on several workstreams, allowing the group to bring the overall timeline forward,” Suez said in its statement.

“The performance program is now aiming for 1.2 billion euros in annual savings by 2023, of which 900 million to be achieved by 2022,” the group said.

It said there would be “an exceptional dividend or share buyback of at least one billion euros as soon as possible, and by no later than the first half of 2021.” ($1 = 0.8522 euros) (Reporting by Benjamin Mallet; writing by Benoit Van Overstraeten; editing by Jason Neely and Louise Heavens)

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