US private equity firm Energy Capital Partners (ECP) is on course to buy UK waste management company Biffa.
The board of Biffa has accepted an offer of 410p per share for the company from ECP special purpose vehicle Bears Bidco.
This represents a premium of 28% on the closing price of 325p per share on 6 June 2022, which was the last day prior to the commencement of the offer period.
ECP has been an investor in energy transition, environmental infrastructure and sustainability-focused businesses for almost two decade.
In a statement, Biffa said: “Given generally supportive but uncertain public policy in the waste management sector, ECP believes that Biffa requires patient, sustained capital investment predicated on a long-term investment horizon.
“With a long-term view of capital allocation, 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.
“These drivers and the importance of effective waste management more generally have been re-emphasised in the 2018 Resources & Waste Strategy, the Waste Management Plan for England published last year, and the Environment Act 2021.
“ECP intends to support Biffa’s management in their efforts to continue developing the business 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.”
Biffa chair Ken Lever said: “Since IPO in October 2016, the successful pursuit of our growth strategy has seen Biffa expand its leadership position in its I&C collections business and oversee a significant investment programme across UK green economy infrastructure, strengthening its capabilities as one of the leading sustainable waste managers in the UK.
“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.
“While being lower than the proposal previously announced on 7 June 2022, 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.”