Veolia Environnement acquires Cleanaway UK

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2006-07-04

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Veolia Environnement acquires Cleanaway UK

  1. 1. Veolia Environnement acquires Cleanaway UK on June 30th, 2006 cf. press release 30 june 2006 (http://www.veolia-finance.com)Investor Relations – Veolia Environnement acquires Cleanaway UK – June 30th, 2006
  2. 2. Strategic fit Core business in a consolidating and fast-growing market Good geographical complementarity Accelerates Veolia’s organic growth Strong financial performance Synergy benefitsInvestor Relations – Veolia Environnement acquires Cleanaway UK – June 30th, 2006 1
  3. 3. Key terms of the transaction Cash consideration of £595 million (€859 million), subject to adjustment for debt in the Cleanaway UK Group Estimated, after-tax, pension and environmental liabilities of £80 million (€115 million) 8.0x implied FV/LTM EBITDA before synergies Subject to regulatory approval by EU competition authorities Revenue £499m (Veolia Environnement), £485m (Cleanaway UK) (1) (1) Calendarised to December year endInvestor Relations – Veolia Environnement acquires Cleanaway UK – June 30th, 2006 2
  4. 4. The UK waste sector — A fast-growing market Market size of around £6.7 billion (€9.7bn) Growing demand Implementation of for treatment & EU regulation recycling infrastructures Demand for Acceleration of PFI integrated solutions initiatives UK waste sector growth drivers Requirements for Increased recycling value-added rates of municipal services waste Increase in Landfill Waste diversion tax from landfills Expected growth: >6% per annum in the near-termInvestor Relations – Veolia Environnement acquires Cleanaway UK – June 30th, 2006 3
  5. 5. The UK waste sector — VES leadership positioning Competitive Landscape – Estimated 4,500 players Veolia Environment Services 7.4% WRG 6.0% Sita 7.2% 61.8% Cleanaway 7.3% Others Biffa 10.3% Total market size = £6.7bn (€9.7bn) Veolia Environmental Services: Ability to deliver a comprehensive range of services: – Collection, Recycling, Treatment and Disposal of municipal and hazardous & non-hazardous industrial waste Ability to provide Integrated Management Solutions – Strong position in the PFI market with recent successes Ability to grow faster than the marketInvestor Relations – Veolia Environnement acquires Cleanaway UK – June 30th, 2006 4
  6. 6. Cleanaway UK A major operator in municipal and industrial waste management sector £494 million (€684 million) revenues in 2005 (year ended June 30) Municipal & Industrial nationwide waste management activity 4 strategically located landfills Advanced Materials Recycling Facilities (“MRF”) at Greenwich and at Rainham Operator of state-of-the-art high-temperature hazardous waste incinerator Employs more than 7,000 employeesInvestor Relations – Veolia Environnement acquires Cleanaway UK – June 30th, 2006 5
  7. 7. Acquisition of Cleanaway UK Accelerating Veolia’s growth in an attractive UK market Complements municipal business with the addition of new services and contracts Doubles the size of the commercial dry waste business with enhanced geographic coverage and route density Complements portfolio of treatment and disposal facilities providing internationalisation benefits Increases recycling capacity Enhances offer for treatment capacity in high temperature incinerators Expansion of Integrated Management Solutions businessInvestor Relations – Veolia Environnement acquires Cleanaway UK – June 30th, 2006 6
  8. 8. Significant natural synergies in all business lines Identified sources of cost synergies – Procurement savings – Route optimisation – Depots rationalisation – Central costs savings Pre-tax annual cost synergies of £26 million (€38 million) to be fully implemented by 2009 Implementation costs of £6 million (€9 million) spread over first two years Revenue synergies in the near termInvestor Relations – Veolia Environnement acquires Cleanaway UK – June 30th, 2006 7
  9. 9. Financial impact The transaction meets Veolia’s investment criteria: – Revenue growth above 6% in the medium term – Significant value creation: IRR at 3% above WACC Earnings accretive from year 1 Limited impact on credit ratiosInvestor Relations – Veolia Environnement acquires Cleanaway UK – June 30th, 2006 8

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