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Surge in waste deals this year

Appetite for acquisitions in the waste sector has increased, with a significant number of transaction closed in the first half of the year, a consultancy has indicated.

In its periodical review of the waste sector, Grant Thornton indicated that 23 deals were completed in the six months to June, more than the 16 in the first half of 2013 and the 15 in the same period of 2012 (graph above).

Deals in the hazardous and industrial, waste management and recycling sub-sectors each accounted for 30% of transactions, with energy from waste at 9%.

In the recycling sphere, most deals were related to WEEE and plastics facilities, each with 29%, followed by metals, organic and paper (14% each).

Mike Read, head of waste at Grant Thornton, said that the surge mirrored the improved conditions of the UK economy.

It was also an indication that larger companies were seeking smaller acquisitions to enhance their existing service offering on the background of an increasingly competitive market.

“There is evidence that there is significant appetite amongst the major players to consolidate their market share by picking up smaller operators - as purchases by Biffa, Cleansing Service Group and OCS Group have shown,” he said.

Biffa acquired the commercial waste business of PHS - PHS Wastetech - as part of a strategy to grow market share in the industrial and commercial waste sector.

Cleansing Service Group bought a number of Augean’s hazardous waste assets and OCS Group acquired parts of Euro Dismantling Services, EDS Plant Solutions and EDS Group Holdings.

The largest deal was Interserve’s acquisition of the facilities management business of Initial Facilities for £250m. Read said the acquisition consolidates Interserve’s position as one of the largest support services businesses in the UK.

“It is also a further indication of waste management services being seen as a core part of a wider facilities management offering, and in the context of municipal activities, the efficiencies it gives FM companies ability to offer a joined up multi-service to local authorities,” he said.

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