Pennon Group has announced that it has entered into an agreement for the sale of Viridor, one of the UK’s leading recycling and residual waste businesses, to Planets UK Bidco, a newly formed company established by funds advised by Kohlberg Kravis Roberts & Co for an Enterprise Value of £4.2 billion.
Pennon says the sale of Viridor recognises the strategic value of the company’s strong, diversified and complementary UK recycling and residual waste management platform and expected growth opportunities.
Net cash proceeds are expected to be approximately £3.7 billion at completion, after taking into account debt and debt-like items that will remain with Viridor, and customary costs. There is also the potential for additional consideration of up to £0.2 billion contingent on future events and outcomes, Pennon said.
The Pennon Board announced it intends to use the net cash proceeds to reduce Pennon’s company borrowings and make a return to shareholders, whilst retaining some funds for future opportunities.
The transaction is great news for shareholders as it recognises the strategic value that Pennon has developed and nurtured in Viridor over many years and accelerates the realisation of that value for shareholders
The transaction is conditional on approval from Pennon shareholders, merger control clearance from the European Commission and certain other conditions, and is expected to complete in summer 2020 and was unanimously agreed by the Pennon Board to be “in the best interests of shareholders”.
Pennon will continue to pursue operational excellence and growth within the UK water industry, it says.
Commenting on the Transaction, Chris Loughlin, Pennon Chief Executive said: “Following a detailed review of the Group’s strategic options, we are pleased to announce the proposed sale of Viridor for an Enterprise Value of £4.2 billion.
“The transaction is great news for shareholders as it recognises the strategic value that Pennon has developed and nurtured in Viridor over many years and accelerates the realisation of that value for shareholders.
“On completion of the transaction, Pennon will continue to focus on its sector-leading water and wastewater businesses and will consider further growth opportunities that create value for customers, employees and shareholders.”