UPDATE 1-MVV readies bid for E.On waste burning unit-source

Fri Jun 22, 2012 10:41am EDT

* MVV could bid 800 mln eur to 1 bln eur for unit - source

* Other bidders also preparing offers - sources

* Binding offers due on Monday, June 25

By Tom Käckenhoff and Stefanie Huber

FRANKFURT, June 22 (Reuters) - German utility MVV is readying a bid for E.On's Energy from Waste unit, with the offer seen in a range between 800 million euros ($1 billion) and 1 billion, a source familiar with the sales process said.

"MVV is expected to submit a bid for Energy from Waste on Monday," the person said, adding that MVV was in position to bid on its own rather than with a partner.

The sale of the waste-burning unit is part of E.ON's 15 billion euro disposal programme to streamline its activities as the group struggles to cope with Germany's decision to shut all nuclear plants by 2022.

Sources had previously said Germany-based water and environmental service company Remondis was working on a bid in conjunction with MVV.

"A partnership with Remondis is not planned," the person said on Thursday.

The deal, if successful, would be the biggest takeover in MVV's history and enable the utility to take E.On's place as the largest operator of waste incinerators in Germany.

MVV, E.On and Remondis declined comment.

Separately banking sources said Singapore-based SembCorp is in talks with five or six banks for bridge financing of around 1 billion euros to back its bid for the unit.

Morgan Stanley Infrastructure and Swedish private equity group EQT are also readying bids, sources familiar with the situation said. The two companies were not immediately available for comment.

E.ON has hired Barclays and Royal Bank of Scotland to manage the sale, which was delayed in June with sources saying overcapacity in the waste burning market had reduced bidder interest.

E.ON Energy from Waste generated revenue of 544 million euros in 2011. It has 18 incinerators in Europe, most in Germany, with an annual capacity of about 4.0 million tonnes.

The market is suffering from overcapacity after Germany encouraged construction of incinerators in the 1990s to reduce the use of landfills.

These plants now compete for shrinking amounts of waste as recycling increases. Incineration companies must pay more for the refuse they use as fuel while power prices are falling. In Germany less than 1 percent of electricity comes from waste.

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