The acquisition is expected to enable Pennon to add business with approximately 1.2 million customers
Pennon intends to fund the cash consideration for the acquisition from its existing cash resources. (Credit: analogicus from Pixabay.)
Pennon Group has acquired 100% of the issued share capital of Bristol Water and its subsidiaries, for an equity value of £425m and an enterprise value of £814m including debt.
The company has purchased Bristol Water from its indirect shareholders infrastructure funds advised by iCON Infrastructure with 80% of the shares, and ITOCHU with 20% shares.
With the acquisition, Pennon is expected to add business with approximately 1.2 million customers.
Pennon Group chief executive Susan Davy said: “The acquisition of Bristol Water brings great people and a great business to Pennon and I am hugely excited about building a future together.
“We see attractive opportunities to continue to invest in the Bristol Water business to deliver enhanced resilience and water security to benefit customers in Bristol and beyond.
“This latest acquisition, building on a strong heritage and history, firmly cements Pennon as one of the leading UK water and waste water companies.”
The acquisition of Bristol Water is expected to increase the size and scale of Pennon to serve a total of around 3.5 million population and deliver an estimated 16% increase in regulatory capital value (RCV).
Also, it adds 500 dedicated employees to the company, providing access to a new, wider and diverse talent pool in the South West.
Pennon intends to fund the cash consideration for the acquisition from its existing cash resources.
The UK-focused water infrastructure group comprises South West Water and Pennon Water Services.
South West Water (incorporating Bournemouth Water) in engaged in delivering water and waste water services to a population of nearly 1.8 million in Cornwall.
Davy added: “Additionally, we have demonstrated our credentials as a responsible business, reducing debt levels, increasing pension contributions, and further supporting the Green Recovery for the much- needed regeneration of our region.
“Pennon is also proposing an on-market share buy-back programme of up to £0.4 billion expected to be conducted through to September 2022, noting that this may be reconsidered if other attractive growth opportunities are identified.
“We are also pleased to be recognising shareholder support through the return of c.£1.5 billion to shareholders in the form of a special dividend.”