Shares in South West Water owner Pennon Group Plc surged after there was speculation it was about to sell its waste collection business for £4billion.
The Exeter-headquartered company has, it is understood, brought in investment banks Morgan Stanley and Barclays to sell its Viridor bin collection and incinerator arm.
City sources think US private equity giant KKR, which made a doomed bid in 2019, is about to make a fresh raid.
The speculation caused Pennon shares to leap 6.% to 1,067.5p on Monday, January 13.
Viridor and Pennon said they will not be issuing a comment on the speculation, but it comes just months after Pennon launched a strategic view following the announcement of its £351million operating profit, prompted by a surge in public demand for recycling.
The FTSE 250 firm, which also owns Bournemouth Water, saw an increase in pre-tax profits to £280.2million from £258.8million in 2018 partly thanks to its performance at Viridor’s Energy Recovery Facilities, that create electricity from waste.
Its fist half pre-tax profit for the current financial year was put at £142.9million in November 2019.
Viridor said: “In September the Pennon Board announced it was conducting a full review of the strategic focus, growth options and capital allocation policy for the group, in light of strong financial performance and operational progress, the new K7 regulatory delivery period for South West Water and growth opportunities at Viridor. The review is ongoing and all options are being considered.”
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It is now understood an auction will be formally launched soon, with the sale expected to become one of the 海角视频’s most sought-after investment opportunities of 2020.
Viridor works with 150 councils and businesses and has more than 32,000 customers. It is a market leader in the energy-from-waste sector, where rubbish is burned or composted to produce electricity or gas.
It is likely any potential sale had been delayed because of factors such as the 2019 General Election.
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Viridor has 10 waste-to-energy plants and said it is well placed to benefit from a substantial imbalance of supply and demand for these types of facility and for plastics recycling.
It is looking at building two more and is currently constructing a £65million Avonmouth plastics recycling facility.
In November 2019 Pennon said: “We believe there are continued favourable waste market dynamics in both recycling and residual waste, supporting opportunities for further investment and growth.”