UK resource and waste management company Biffa has received a £1.36bn takeover bid from private equity firm Energy Capital Partners.
The proposal is pitched at 445p a share. Biffa said it would be “minded to recommend” the proposal to shareholders if Energy Capital were to make a firm offer at that price.
Biffa was acquired by Severn Trent in 1991, which floated the business in 2006. In 2008 it was taken private again by a group of private equity investors.
Biffa rejoined the London stock market in 2016 after cutting the price of its initial public offering to 180p a share from the indicative range of 220p-270p. The IPO gave the UK-based company a market capitalisation of £450mn.
In a statement, Biffa said: “The Proposal is subject to the satisfaction or waiver of a number of customary pre-conditions, including satisfactory completion of due diligence and the finalisation and documentation of financing for the transaction.
The Board of Biffa has concluded that should a firm offer be made on the same financial terms as the proposal it would be minded to recommend it to Biffa shareholders
“The Board of Biffa has carefully evaluated the proposal together with its financial adviser, Rothschild & Co, with regard to the fundamental value of Biffa as well as the likely value to be created by the continued delivery of its strategy.
“This evaluation also considered the various risks the company faces including the current status of discussions between HMRC and Biffa regarding a landfill tax enquiry…
“The Board of Biffa has concluded that should a firm offer be made on the same financial terms as the proposal it would be minded to recommend it to Biffa shareholders, subject to the agreement of other customary terms and conditions.”
HM Revenue & Customs is investigating the company over its tax compliance, a probe that Biffa said could result in a liability ranging from £170,000 up to £153m.
Biffa said it “strongly refutes” HMRC’s concerns and that it had not received a formal claim for tax.
Biffa said it “continues to trade well”, with underlying performance being in line with the Board’s expectations.