Today, September 27, Biffa revealed that its board is advising that a worldwide investment fund company’s £1.3 billion offer for the company be accepted.
‘Bears Bidco Ltd, a newly created entity controlled by funds managed by affiliates of ECP (Energy Capital Partners) V, LLC’ is advised to purchase Biffa for 410 pence in cash per Biffa share, according to a statement titled ‘recommended cash offer’ from Biffa.
The acquisition value is an increase of nearly 28% above the closing price of 325 pence on June 6, 2022, when the offer was made.
But, the deal value is not as high as it could have been because of ‘reservations’ included in the announcement by Biffa in June when it disclosed that it could have liabilities including under the UK’s landfill tax regime.
At the time, this was valued at £1.4 billion.
The market for industrial and commercial collections appears to be Biffa’s top priority for future development and acquisitions.
In order to support Biffa’s management in their efforts to grow the company going forward, ECP stated that it would “by investing in the customer offering and future growth of its footprint, both organically and through targeted bolt-on acquisitions, such as supporting Biffa with its plan to consolidate the fragmented I&C collections market in which Biffa is a leader.”
According to a statement from Biffa, ECP has been investing in “energy transition, environmental infrastructure, and sustainability-focused businesses for almost two decades.
ECP believes that Biffa fits its investment criteria well due to Biffa’s 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.
ECP also places significant value on the strength of Biffa’s relationships with its broad stakeholder base, its long-term track record, and its central role in supporting energy transition and the circular economy.”
The statement makes reference to the opinions of ECP. ECP asserts that it thinks Biffa is required to “patient, sustained capital investment predicated on a long-term investment horizon.”
Biffa will be in the best position to succeed in its key markets with a long-term perspective on capital allocation.
These markets are supported by long-term growth drivers such as 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. The 2018 Resources & Trash Strategy, the Waste Management Plan for England released last year, and the Environment Act 2021 all reiterated these factors as well as the significance of efficient waste management in general.
