Veolia said it had raised its offer to 18 euros per share against 15.5 euros per share, valuing the stake at 3.4 billion euros against 2.9 billion euros previously.
He added that the offer was valid until the end of Wednesday, meeting the original deadline for his offer to Engie.
But Veolia added that it would only launch a subsequent takeover bid for the whole of Suez with the blessing of the company’s board of directors, and offered a six-month period to negotiate, if it acquires the 29.9% stake.
The French finance ministry called on Veolia to demonstrate that its approach to Suez is friendly. The state holds a 23.6% stake in Engie, which in turn owns 32% in Suez.
Suez shares rose 6.6% at the start of the session.