Sunday 12 January 2020 4:28 pm

KKR makes surprise bid for Pennon's recycling arm

Pennon’s bin collection and incineration firm Viridor has been the subject of a shock bid from US private equity fund KKR, in an attempt to knock out the competition before an expected auction process.

Viridor is set to be one of 2020’s most keenly fought acquisitions, with a number of companies said to be interested in a takeover bid.

Read more: Pennon raises dividend on the back of a robust first half

The bid, which was made in early 2019 and subsequently rejected, comes after bankers from Morgan Stanley and Barclays were appointed to run the sale process at a valuation of £4bn.

Advisers are currently in the process of getting the auction underway, and have yet to formally sound out potential bidders. News of the bid was first reported by the Sunday Telegraph.

In September, Pennon, which owns South West Water, said it was considering options for Viridor, which produces energy by burning waste.

Viridor, a major player in the energy-from-waste quarter, is contracted by more than 150 businesses and councils and has over 32,000 customers.

In Pennon’s first half results in 2019, the firm said that the business had seen consistent growth, and was “consistently outperforming” investment case returns.

The division’s new plastics processing facility is on track, which would add much needed capacity to the UK market.

Read more: Pennon flushes away concerns with steady performance

It was anticipated that Pennon would wait until Ofwat had released their final pricing review, which it did in December, before going ahead with the sale.

KKR declined to comment, while Pennon did not respond to a request for comment.

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