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CORRECTED-UPDATE 2-Suez rebuffs Veolia's assurances it will not make hostile bid

 (Corrects size of share in first paragrah)
    By Gwénaëlle Barzic and Mathieu Rosemain
    PARIS, Oct 4 (Reuters) - French utility Suez           on
Sunday rejected assurances from rival Veolia          that it
will not make a hostile bid for the whole company after closing
in on a deal to buy a 29.9% stake from power group Engie
          .
    Veolia          said it would not launch a hostile bid for
the remaining shares in Suez and that any bid for the rest of
the shares would require approval from Suez's board.
            
    Veolia had moved closer to a deal to buy Engie's 29.9% stake
in Suez on Wednesday, in a prelude to a full takeover bid and
marking a breakthrough after weeks of hostilities between the
two utilities.             
    Veolia had removed certain conditions and clauses from the
previous outline of its agreement with Engie to persuade the
different parties that it would seek a consensual deal. 
    But in a letter from Suez Chairman Philippe Varin to
Veolia's boss, which was made public, Varin said the Suez board
considered Veolia's approach as hostile.             
    Suez has fiercely rejected Veolia's approach and is
supporting a plan by French private equity group Ardian to pull
together an alternative bid for Engie's stake in Suez.
            
    Veolia has also told Suez it would extend the scope of the
assets to be sold to a would-be buyer of Suez's French water
activities to include its international water assets.
    The businesses that could potentially be sold to smooth the
way to the Veolia-Suez deal would yield total turnover of 5
billion euros  ($5.86 billion), including the 2.2 billion euros
generated by Suez's French water business. 
    Veolia has raised its bid to Engie's Suez stake to 3.4
billion euros. The additional guarantees it offered on Sunday to
Engie's board will make that acquisition possible, Veolia said
in the same statement.             
    French Finance Minister Bruno Le Maire, who has appealed for
dialogue, said on Thursday the Suez-Veolia situation was moving
in the "right direction." The French state is a major Engie
shareholder.             
    
($1 = 0.8537 euros)

 (Reporting by Mathieu Rosemain, Gwénaëlle Barzic and Sarah
White; Editing by Toby Chopra/Barbara Lewis/Jane Merriman)
  
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