“The secondary transaction where Cleanaway acquires 7 strategic assets (5 transfer stations and 2 landfills) is more favourable to shareholders given ... it represents some assets the ACCC will likely require to be divested in the event of a Suez/Veolia transaction and neatly fill a meaningful gap in CWY’s current infrastructure footprint,” said JP Morgan.

It also said integration risks “are materially lower and synergies more immediate and much easier to achieve given the internalisation of landfill volumes.”

Veolia had been scathing of Suez’s agreements to sell the Australian operations, or these Sydney assets to Cleanaway at prices which favoured the $5 billion ASX-listed group.

As recently as Friday the French group referred to “the transfer to Cleanaway of a number of significant and very profitable assets, without any competition, and at a knock-down price of $501 million.”

“This sale is being made on terms that are contrary to the interests of Suez, which is depriving itself of a profitable asset in an attractive region, and to the interests of its shareholders, as the sale can only have a negative impact on Veolia’s offer,” it said.

The two French groups have agreed to enter into definitive merger agreements by May 14 and end their legal battles in the French and Australian courts.

“We have been calling for a negotiated solution for many weeks and today we have reached an agreement in principle that recognises the value of Suez,” said the company’s chairman Philippe Varin.

“We will be vigilant to ensure that the conditions are met to reach a final agreement that will put an end to the conflict between our two companies and offer development prospects,” he said.

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The time for confrontation is over, the time for combination has begun,” said Veolia’s CEO Antoine Frérot.

The proposed Cleanaway deal was a major fillip for the company with its stock price finally recovering the ground lost in January with the sudden resignation of chief executive Vik Bansal.

Mr Bansal, who has been under scrutiny over the past year after an investigation by The Australian Financial Review alleged he had bullied and harassed staff, was the architect of the deal. Mr Chellew is acting as CEO until a replacement is found.

Cleanaway shares last traded at $2.47.