Fork lift truck gathers plastics from a recycling bay at BIFFA recycling plant in Beaumont Leys in ... [+]
Waste management business Biffa’s share price surged on Tuesday after it agreed to a £1.3 billion takeover from US-based Energy Capital Partners (ECP).
The deal values Biffa shares at 410p. This is a 28% premium to the closing price of 325p on 6 June, the day before a £1.4 billion offer from ECP was announced.
Commenting on the deal, Ken Lever, chairperson of Biffa said that “ECP is an experienced investor in environmental infrastructure and sustainability assets and offers a supportive environment to accelerate the group's further development and growth as a leading enabler of the circular economy.”
Biffa’s shares were last trading 28.3% higher on the day, at 407.8p.
Bear Necessities
Bears Bidco — a new company established by ECP — will pay £100m less than what the US firm initially proposed back in June.
Explaining this lower figure, Lever said that “it is the Biffa board's view that this offer represents a compelling opportunity, particularly in a weakening economic environment, for shareholders to realise, in cash and with certainty, the potential for future value creation.”
Investment firm ECP has invested in 20 portfolio companies spanning the energy transition, electrification and decarbonisation infrastructure sectors. These businesses operate in areas such as power generation, renewable energy and storage solutions, environmental infrastructure and sustainability, efficiency and reliability.
ECP explained that “Biffa fits its investment criteria well due to [its] position as a leader in UK sustainable waste management, underpinned by a strong national brand and extensive service coverage led by an excellent management team and backed by powerful barriers to entry.”
It added that “Biffa will be best positioned to thrive in its key markets, which are underpinned by long-term growth drivers including the UK Government's policy objectives to increase plastics recycling and re-use, eliminate avoidable waste and achieve 65% recycling of municipal waste by 2035.”
Completion By Early 2023
The takeover deal, which will now be voted on by shareholders, is expected to complete during the final quarter of 2022 or the first quarter of 2023, Biffa said.
Biffa covers 95% of the UK with its business and household waste collection services. It has recycling capacity of 400,000 tonnes of waste per year, equivalent to the household recycling of 4 million people. And Biffa generates around 530 million kWh of energy a year through processes like landfill gas capture and anaerobic digestion.
