Pennon snaps up Bristol Water, but with cash to spare

摘要

Pennon's expensive purchase of Bristol Water - the deal's enterprise value of £814 million represents a 44% premium to the target's regulatory asset value (RAV) - may not be the end of its acquisition spree in the sector. For while Pennon is currently planning to return most of the remaining proceeds from last year's £3.7 billion sale of its Viridor waste management business to shareholders, group financial director Paul Boote revealed that up to £400 million of that money could yet be used to finance another takeover. This is the amount that Pennon is currently proposing to use for share buybacks - following the payment of a £1.5 billion special dividend and a two-for-three share consolidation - but Boote confirmed on the earnings call that the company might use the money for a further acquisition if a suitable opportunity arose. "That's very much a possibility," he acknowledged.