In a landmark deal worth over £1 billion pound and a sign of how the UK’s utilities are being quickly acquired and sold, Veolia Environnement has agreed to sell 90% of its UK water businesses.
The majority stake has been sold in its UK regulated water businesses Veolia Water Central, East and Southeast to Rift Acquisitions Limited for a total transaction value of £1, 236 million.
The group has retained its Veolia Water Outsourcing business and said it has established an exchange agreement to ensure “sharing of best practices and continued access to previously developed capabilities”.
Industry pundits said the sale price was healthier than predicted.
Dr David Lloyd Owen, managing director of consultancy Envisager, told Water & Wastewater International magazine (WWi): “Veolia will have been pleased to get this price as the valuation was assumed to be closer to £1 billion when the sale was originally announced.
“The purchasers are buying the businesses on their presumed ability to generate dividends in the region of £45 to £64 million pa over a sustained period of time. We have seen a mixed record with private equity investors in the sector in the UK to date, some treating the companies as cash cows, others taking steps to take investment and performance ahead of their peers.”
Olivier Bret, Veolia Water chief executive officer, said: “The sale will reduce the capital intensity of the group and in doing so create a platform that will allow the company to wholly focus on its commercial outsourcing business and continue to provide a valued service to our clients and partners.”
Earlier this year the China Investment Corporation bought a 8.68% stake in UK utility giant, Thames Water (see WWi story).