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Pennon completes Bristol Water acquisition

Pennon has acquired 100% of an issued share capital of Bristol Water from its indirect shareholders, these being investment management company iCON Infrastructure and ITOCHU Corporation.

The Exeter-based water utility company made the purchase - which adds a business with approximately 1.2 million customers to its portfolio - for an equity value of £425m, and an enterprise value of £8.1bn including assumed debt.


The acquisition is expected to be earnings accretive and will result in an increase of around 16% in Pennon’s regulatory capital value (RCV) - a measure of a company’s market value plus the value of accumulated capital investment assumed at each price review - as of 31 March 2021, with the price equating to a premium to RCV of 44%.


Commenting on the acquisition, Pennon’s chief executive Susan Davy said: “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.


“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 has also announced a return of capital to shareholders, consisting of a special dividend of around £1.5bn, and a share buy-back programme of up to £400m.


Davy added: “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 Pennon’s confidence in our ongoing growth strategy, and building a sustainable future for all.”

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