Montagu Private Equity and Global Infrastructure Partners (GIP), the private equity duo that bought out UK waste services company Biffa almost four years ago for £1.23bn, are in talks to sell the business for nothing in return for any future gains from mergers.
The firms are in negotiations over a deal that would see the company handed over to Veolia, Suez and Pennon in return for any future merger synergies, which could be worth as much as £50m annually, the Daily Telegraph reported on Wednesday.
Biffa has struggled under the weight of more than £1bn of debt since the economic crisis took hold, the loan covenants for which are due to be met this summer. Both firms are subsequently under pressure to sell the company quickly, the report added.
Montagu, the former buy-out arm of HSBC, has also launched a formal sale process for German bandage producer BSN Medical, in a deal that could net the firm up to €2bn.
The sale marks the third time that Montagu has attempted to sell the company, after shelving plans to exit in 2008 amid the financial crisis and cancelling a public listing worth up to €2bn in 2010.
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