VIRIDOR acquired by KKR

KKR agreed in March 2020 to acquire Viridor, the British waste treatment and energy recovery company, from Pennon Group, through Planets UK Bidco, a company formed for the purpose by funds it advises. The consideration implied an enterprise value of £4.2bn on a cash-free, debt-free basis, an EV/EBITDA multiple of 18.5x. Debt and debt-like items stayed with Viridor, including lease obligations and provisions attached mainly to its landfill sites, leaving Pennon with net cash at completion, and Pennon could receive further consideration within six years should Viridor recover amounts on certain contingent matters. The sale followed a review of Pennon’s strategy, growth options and capital allocation launched in September 2019, at the end of which the board judged a disposal the best way to realise the value of the business in cash. Pennon planned to use the proceeds to reduce its borrowings and return money to shareholders, probably through a special dividend, while keeping funds for future opportunities, and to concentrate on its water and waste water businesses. At the time of the agreement, Viridor served around 150 local authorities and large corporate clients, held some 32,000 customer accounts and employed around 3,000 people. Completion, expected in the summer of 2020, required approval by Pennon’s shareholders and clearance from the European Commission. Barclays and Morgan Stanley acted as joint financial advisers and joint sponsors to Pennon, with Morgan Stanley also serving as corporate broker.