Biffa completes £35m acquisition of O’Brien

UK waste management company Biffa has announced it has completed its acquisition of O’Brien Waste Recycling Solutions Holdings Limited (O’Brien), a company providing waste and recycling services across the North East of England.

Biffa completes £35m acquisition of O’Brien
O’Brien WRS has been purchased for a cash consideration of £35.2 million using funds from Biffa’s cash and debt facilities, with a further £900,000 payable upon the satisfaction of certain conditions.

The move is expected to immediately boost revenues for Biffa, which recently announced falling profits for the financial year 2016/17 due to exceptional costs incurred in its flotation on the stock market.

O’Brien currently generates annual revenues of around £34.4 million and earnings before tax, depreciation and amortization of around £6.6 million, and has an operating profit of £5.3 million and gross assets of some £15.3 million. The company currently employs around 190 employees who will be retained following the acquisition.

In an update to investors, Biffa explained how it had identified O’Brien as an appropriate purchase due to the complementary nature of its operations to those of Biffa, with its collection service serving around 3,600 people and generating revenues close to £20.7 million across the North East, providing Biffa with a significant presence in the region.

Biffa will also be acquiring three of O’Brien’s waste treatment and recycling facilities in the region, which serve both local authorities and commercial customers.

The collection business will be incorporated into Biffa’s Industrial & Commercial (I&C) collection business while the waste treatment facilities will be brought under the control of Biffa’s Resource Recovery & Treatment (RR&T) divisions.

Commenting on the acquisition, Ian Wakelin, Chief Executive of Biffa, said: "The acquisition of O'Brien WRS is further evidence of our ongoing strategy of combining organic growth with value-creating acquisitions which enhance our network, capabilities and service offering. As one of the UK's largest waste management companies, Biffa is a natural consolidator, with the scale, reputation and expertise to grow and build upon our market leading positions.

"This acquisition significantly strengthens our market presence in the North East of England. We welcome the employees of O'Brien WRS to Biffa and we look forward to working together to provide a great service to our customers."

Nathan O'Brien, Managing Director of O'Brien Waste Recycling Solutions, added: "O'Brien WRS's wide range of recycling solutions serve both commercial and local authority customers and have driven continuous, successful growth.

"The opportunity to join Biffa was a natural choice for our business due to Biffa's scale, UK-wide network and complementary capabilities. Being part of a bigger group creates many exciting opportunities for the combined businesses."

"I want to thank each and every one of our staff for their attitude, commitment, and the energy they bring to the business every day. I am proud of what we have achieved. I have said this many times before; Every single person matters in this business, every single day. I would also like to personally thank all of our customers for their past and future support. The management team at O’Brien and Biffa Waste Services will be working hard to bring the best of the two businesses together and to maintain excellent levels of service."

KPMG’s Corporate Finance practice in Newcastle advised the shareholders of O’Brien on the sale. Rod Wilkinson, who leads the team, commented on the transaction: "This is a significant M&A transaction for the North East given the high profile of O’Brien. The waste sector is in the midst of a period of consolidation and this is the latest and largest deal in recent months involving privately owned businesses in the region."

String of acquisitions

Biffa’s latest purchase is but the latest in a line of recent acquisitions by the company as it seeks to expand and consolidate its market position as a leading waste management and treatment company.

Following several changes of ownership in the last few years, with the group going private in 2008 in a £1.7 billion deal by Global Infrastructure Partners in partnership with Montagu Private Equity and Halifax Bank of Scotland, taking on the company from water company Severn Trent plc.

The company was then sold on to American investment firms Angelo Gordon, Avenue capital and Sankaty Advisors, and Babson Capital Europe Limited in 2012 as part of a debt restructuring package. The company was floated on the stock market in October 2016 with the aim of raising £270 million to fund its continued expansion.

Just last month (14 June), Biffa announced that it had sealed a new partnership with Covanta to develop two new energy-from-waste (EfW) facilities in the UK as part of its expansion.

This was in addition to the acquisition of Blakeley’s Recycling Ltd, serving the North West of England, in September 2016, and Cory Environmental’s waste collection business last June.

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