Pennon to sell Viridor for £4.2 billion
Pennon Group has entered into a £4.2-billion agreement for the sale of Viridor to newly-formed company Planets UK Bidco Limited.
Planets UK Bidco Limited, which was established by funds advised by Kohlberg Kravis Roberts & Co, is expected to take over Viridor in summer 2020 on condition of approval from Pennon shareholders, merger control clearance from the European Commission and certain other conditions.
Commenting on the transaction, Chris Loughlin, Pennon’s Chief Executive, commented: “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.”
Net cash proceeds are expected to be approximately £3.7 billion at completion, after taking into account customary costs and debt and debt-like items that will remain with Viridor, while there may also be the potential for additional consideration of up to £200 million. Pennon Group says that it intends to use the net cash proceeds to reduce the company’s borrowings and make a return for shareholders, whilst also retaining funds for future opportunities.
The transaction was unanimously agreed by the Pennon Board but awaits the final approval from Pennon shareholders.
Under Pennon’s ownership, Viridor has stepped up its recycling capacity, and is set to open its Avonmouth plastic recycling plant later this year, after announcing its intention to process all plastic recycling domestically.
In February, Viridor held an event in Bristol, entitled ‘Rubbish to Resource’, where the Taunton-based company called on businesses and local authorities in the South West and south Wales to collaborate to improve plastics recycling in the region.