Pennon to buy Bristol Water for £814m
3 June 2021, 08:04
Pennon was left with billions of pounds to spend after selling a waste business last year.
Water giant Pennon will take on more than a million new customers as it expands into Bristol in an £814 million deal.
Pennon has agreed to buy the company behind Bristol Water from its current US, European and Japanese owners.
Around 1.2 million people rely on Bristol Water for clean drinking water in and around the city.
“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,” said Pennon chief executive Susan Davy.
She added: “This latest acquisition, building on a strong heritage and history, firmly cements Pennon as one of the leading UK water and waste water companies.”
Pennon has been sitting on a large pile of cash for nearly a year since it sold waste management business Viridor for £4.2 billion.
It pumped around £1 billion into reducing its debt, and has spent the time since trying to find a use for the remaining cash.
The £814 million acquisition of Bristol Water – which includes £389 million of Bristol’s debts – was announced alongside a plan to return £1.9 billion to shareholders.
Pennon said it would pay special dividends of £1.5 billion to shareholders and buy back shares for £400 million.
Ms Davy said that bosses might shelve the buyback plans if Pennon finds something else to invest in.
She said: “Our sector-leading dividend policy, which we have strengthened today, together with the proposed special dividend, recognises the ongoing loyalty of our shareholders, underpinned by the group’s confidence in our ongoing growth strategy, and building a sustainable future for all.”
Separately on Thursday, Pennon reported a 31% drop in pre-tax profit for its most recent financial year to £132 million on revenue of £645 million, up 1.2%.
Ms Davy said: “This has been a pivotal year for the group as we have repositioned Pennon to focus on driving sustainable growth in the UK water sector, building stability for the longer term, and recognising ongoing shareholder loyalty.”
