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18 March 2020 18:36

Pennon Group Viridor LON:PNN

Pennon Group Enters in Agreement for Sale of Viridor Limited

South West Deals Marco Ferrari A recycling and residual waste business is set to be acquired in a £4.2bn deal. Viridor has operations across England, Wales and Scotland with a workforce of about 3,000 people and is headquartered in Taunton. It provides services to about 150 local authorities and major corporate clients as well as approximately 32,000 customers across the UK. Listed parent company Pennon Group has entered into an agreement with Planets UK Bidco Ltd for the sale. Planets UK Bidco Ltd was established with funds advised by US private equity firm Kohlberg Kravis Roberts (KKR) for the purpose of the deal.

"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 £4.2bn," said Pennon chief executive Chris Loughlin. The sale is expected to be completed by the summer of 2020 and is conditional on approval from Pennon shareholders, merger control clearance from the European Commission and certain other conditions. Pennon, which is headquartered in Exeter, intends to use the net cash proceeds to reduce its borrowings and make a return to shareholders, while retaining some funds for future opportunities. Following completion, Pennon will be a UK-focused water infrastructure group, comprising South West Water and Pennon Water Services. Barclays Bank, acting through its investment bank, and Morgan Stanley & Co International, are advising Pennon.

Sign up to FREE email alerts from DevonLive - ExeterLive News Subscribe Thank you for subscribing See our privacy notice Invalid Email Exeter-based utilities giant Pennon has entered into a conditional agreement to sell Viridor, its recycling and waste business, for more than £4 billion. Planets UK Bidco Limited (Bidco), a newly formed private limited company established by funds advised by Kohlberg Kravis Roberts & Co. L.P. (KKR) is to take the business on. The sale of Viridor for £4.2 billion is on a cash-free, debt-free basis, with Pennon intending 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 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.

The sale was unanimously agreed by the Pennon Board to be in the best interests of shareholders. Pennon, which also owns South West Water, has said it will continue to pursue operational excellence and growth within the UK water industry. 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. Pennon Group Plc has reported entry into an agreement for sale of Viridor Limited. Viridor is a recycling, renewable energy and waste management company in the United Kingdom.

Sale of Viridor of £4.2 billion on a debt-free basis. Net cash proceeds are anticipated to be £3.7 at completion, taking into account debt and debt-items that will remain with Viridor, including customary costs. The Pennon Board aims to use these proceeds to reduce the company's borrowings and return some to shareholders and retain some funds for future ventures. The transaction must be approved by Pennon's shareholders, including obtaining merger control clearance from the European Commission. The transactions is expected to close in Summer 2020. "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. Pennon will be hosting a briefing on 18 March 2020 commencing at 16:00 GMT to discuss this announcement. The webcast can be accessed directly at -w.tv/892-1187-23659/en. A conference call facility is also available (Dial-in: +44 20 3936 2999 | PIN: 697537). The webcast can also be accessed via the Investor Relations section of Pennon's website (-group.co.uk/investor-information), with an on-demand replay available following the briefing. 18 March 2020 by Joshua Doherty The Pennon Group has entered into an agreement for the sale of Viridor to an investment business, Planets UK Bidco Limited, for £4.2 billion. Pennon, which also owns South West Water, announced today (18 March) that a newly formed company, Planets UK Bidco, had been established by funds which are advised by Kohlberg Kravis Roberts & Co LP (KKR), which reportedly had a bid for the company turned down last year (see letsrecycle.com story). The transaction, said Pennon, still needs approval from its shareholders, merger control clearance from the European Commission and needs to meet certain other conditions. The deal is expected to complete in summer 2020. Pleased 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." 'Strategic value' Pennon says the agreement "recognises the strategic value of Viridor's strong, diversified and complementary UK recycling and residual waste management platform and expected growth opportunities", and it intends to use the net cash proceeds to reduce company borrowings and make a return to shareholders. Some of the funds will also be retained for future opportunities, Pennon added. A meeting will be held this afternoon among shareholders to discuss the agreement. Pennon is planning the sale of its recycling and waste business Viridor to Planets UK Bidco Limited for £4.2bn. Pennon said the sale of Viridor will be done on a cash-free, debt-free basis. It also said that net cash proceeds were to be approximately £3.7bn 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 an additional consideration of up to £0.2bn contingent on future events and outcomes. Pennon said it would use the cash to reduce the company's borrowings and return some to shareholders. It will also retain some of the funds for future opportunities. The sale will need an approval from Pennon shareholders and clearance from the European Commission. It is expected to be complete by the summer of 2020. Commenting on the transaction, Chris Loughlin, Pennon Chief Executive said: " 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." Planets UK Bidco Limited is a new company established by by funds advised by Kohlberg Kravis Roberts & Co. KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds.