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Essent Scraps Sale of Waste Unit

LONDON/AMSTERDAM (Reuters) – Dutch utility Essent scrapped the sale of its waste-management unit, blaming low prices and other problems with bids for the failure of an auction that had once aimed to raise a billion euros or more.

The sale of Essent Milieu, which bankers began working on in late 2008, had originally promised to be one of Europe’s first big leveraged buyouts (LBOs) since the credit crunch, with a staple financing helping attract private equity firms such as BC Partners and PAI.

Instead, the sale’s abrupt cancellation angered the two remaining bidders — the all-Dutch “Orange” financial consortium and U.S. waste firm Covanta (CVA.N) — and marked the latest auction scuppered by scarce debt and disagreements over price. “None of the bids could live up to our criteria,” Essent spokesman Jeroen Brouwers said. “With these market circumstances they couldn’t offer the price we wanted.”

Other issues, such as policies regarding employees, had also not met Essent’s criteria, he added.

Brouwers said Essent Milieu would talk to its shareholders, Dutch provinces and municipalities, about their future strategy, and would consider all options, including reviving a sale in future or a listing on the stock exchange.


A leading figure from the “Orange” consortium — which comprised ABN AMRO Infrastructure Capital Management, NIBC Infrastructure Partners, and the two biggest Dutch pension funds, ABP and PGGM — bemoaned the auction’s collapse.

“It’s very, very disappointing to have made all this effort, and having been given assurances that the business would be sold, for it simply to be withdrawn,” said Hans Meissner, chief executive of the ABN fund.

“Finding finance at the moment is very difficult and everybody has put in vast amounts of work. Banks are irritated and frustrated that the sale of the asset has been stopped,” Meissner said.

A person familiar with the matter said the Orange group, responding to a request from Essent, had also recently sweetened its bid by about 50 million euros ($71.44 million) to a little more than 600 million euros, not including provisions for liabilities.

Earlier this year banking sources said Essent hoped to sell the unit for more than 1 billion euros, or more than 6.7 times its earnings before interest, tax, depreciation and amortisation (EBITDA).

A second person familiar with the matter said Covanta and its advisers were also “surprised” by Essent’s decision. Covanta could not immediately be reached for comment.


The auction was part of a big, state-led shake-up of utilities in the Netherlands, in which Germany’s RWE (RWEG.DE) is buying Essent’s production and delivery arm for 8.2 billion euros, and rival Nuon [NUON.UL] is teaming up with Sweden’s Vattenfall [VATN.UL].

Essent’s network arm, Enexis, will stay in public hands. Essent Milieu will also remain as a separate arm owned by public shareholders, Brouwers said.

Credit Suisse and ING advised Essent. It obtained a second opinion from Dutch bank Mees Pierson, while Lazard advised shareholders, Brouwers said. JPMorgan and Rabobank advised Covanta while BNP Paribas advised Orange.

Essent’s scrapping of the auction echoes others such as Rio Tinto’s (RIO.L) (RIO.AX) decision a fortnight ago to pull the sale of its market-leading borates business after bids came in too low.

“Essent don’t understand why the business isn’t worth what it was a year ago. Well, I’m afraid the world has moved on,” ABN’s Meissner said.

(Reporting by Catherine Hornby in Amsterdam and Quentin Webb in London, editing by Will Waterman)