DealZone

Another one bites the dust

June 3, 2009

The Essent electricity plant is seen in MoerdijkAnother auction — appropriately enough, this time of a waste management firm — is consigned to the dustbin of history. As Catherine Hornby and I wrote earlier:

“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.”

Back in January it seemed this deal would illustrate “how much appetite remains for the unglamorous but dependable business of garbage treatment, which enjoyed its own mini-boom during the credit bubble”. Not so much, it turns out.

And it’s in keeping with a wider trend of drawn-out and sometimes failed auctions that we highlighted in March. For its part, Essent says it never planned to sell at just “any price”. One of Essent’s spurned suitors retorts: “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.”

Read the full story here.

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