PARIS (Reuters) -Veolia and Suez on Monday announced a merger deal worth nearly 13 billion euros ($15.44 billion) after months of wrangling between the two French waste and water management companies.

Rivals since the 19th century, Veolia pursued the smaller Suez arguing that together they could better fight off new global challengers emerging in China.

The companies would also be better placed to innovate in growth areas such as environmental services and recycling, Veolia said.

The agreement values Suez at 20.50 euros ($24.4) per share, the companies said, after Veolia, which already owns 29.9% of the group, hiked its bid price from 18 euros.

Shares in Suez were up nearly 8% while Veolia shares were up 7% following the announcement.

Paris-based Suez in February rejected an 11.3 billion euro takeover bid from Veolia. It had rebuffed advances since Veolia bought a stake in the firm last October.

The groups have clashed in court and Suez has set up defences including a foundation to ringfence its French water business, which will now be deactivated.

Suez had signalled it would want to start talks at a higher price.

As part of the agreement, and in part to ease antitrust problems, some of Suez’s assets will be spun off into a new entity with around 7 billion euros in revenue.

Investment funds Meridiam, Ardian and Global Infrastructure Partners as well as state-backed Caisse des Depots and employees will be shareholders in the “new Suez”.

($1 = 0.8415 euros)

(Reporting by Sudip Kar-Gupta, Matthieu Protard and Sarah White; editing by Jan Harvey and Jason Neely)