After accepting a lowered £1.3bn takeover bid, Biffa is set to be acquired by a group controlled by US private equity firm Energy Capital Partners (ECP).
The UK waste management company’s shares rose by 28% following the announcement of the deal on Tuesday (27 September) following an initial 28-day extension for the board to decide on the takeover bid.
Biffa’s board said they had reached an agreement in a “weakening economic environment” with ECP. The waste manager will be sold to Bears Bidco, a newly incorporated company controlled by funds managed by affiliates of ECP, in a deal where the ECP will pay 410p in cash for each share of Biffa.
In June 2022, ECP made an unsolicited bid worth 445p per share – at the time Biffa’s board said it was “minded to recommend” that shareholders accept the offer. The final deal is worth 7.9% less per share than the original offer.
We intend for Biffa to remain focused on providing the high level of service to which its customers have become accustomed.
Ken Lever, Biffa’s chair, said: “ECP is an experienced investor in environmental infrastructure and sustainability assets. It offers a supportive environment to accelerate the group’s further development and growth as a leading enabler of the circular economy.
“Whilst 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.”
ECP invests in energy transition, electrification and decarbonisation infrastructure assets that are focussed on sustainability.
ECP says it believes that Biffa fits its investment criteria 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 partner Andrew Gilbert said: “ECP is excited to begin this long-term partnership with Biffa and its extremely talented employees and leadership.
“We intend for Biffa to remain focused on providing the high level of service to which its customers have become accustomed, and look forward to supporting Biffa’s strategic initiatives, development, growth and industry leadership.”
