There has been an upturn in mergers and acquisitions (M&A) activity in the waste industry over the last few weeks, a trend which is expected to continue.
After a period of absence from M&A, Biffa made the headlines by acquiring Shanks’ solid waste business in the UK.
Biffa was able to cherry-pick the facilities it wanted and has paid £8m in cash and £1.5m in working capital (above the normalised level), which Shanks will receive as it unwinds.
It was a split exchange and is expected to complete at the end of December. For the £8min cash, Biffa has received £3.9m in assets and £47m in sales and a more-or-less breakeven business. Clearly there will be significant synergies with Biffa’s existing C&I business, so this looks like sensible business for both Biffa and Shanks.
Shanks will no doubt be aware that the diversified Dutch waste management business Attero, owned by six provinces and other municipalities, has been up for sale since May and is thought to be close to completing a deal.
In addition to its landfill and incineration business, Attero is also the leading organic waste processor in the Netherlands with a 45% market share (570 kiltonnes per annum), with Indaver (175ktpa) and Shanks (130ktpa) some way behind.
Given Shanks’ focus on organics in the Benelux, it will be interesting to see if it can carve out this part of the business from the holding company – this surely must be the deal to do after disposing of the solid waste operation.
Again overseas, it was announced that Bill Gates has invested in the Spanish firm FCC, becoming one of the single largest shareholders with around a 6% holding.
Whilst the headlines spun this as a bet on Spain, FCC has been pretty active in diversifying geographically and building its environmental services business, which processed nine million tonnes of waste last year and delivered around 75% of group EBITDA.
FCC Environmental will benefit from this investment, especially as it will assist FCC refinance €5bn (£4.2m) of bank debt that starts to mature next year.
Back in the UK, the shareholders of Infinis have decided to go down the IPO route and have issued a prospectus and a price range.
Based on the offer range, the company will have an enterprise value of between £1.35bn and £1.5bn which would make a valuation of 12 times EBITDA at the upper end.
The company will be admitted to the London Stock Exchange on 20 November which will enable the industry to gauge wider investor appetite for the sector.
It appears that there is renewed interest in M&A in the waste sector and I expect to see more deals completing from now until the end of 2014.