Biffa posts strong results amid sale rumours
Reports have emerged that waste management group Biffa is seeking takeover bids from the waste industry, on the same day that the company announced a 19.4 per cent increase in earnings before tax.
The company yesterday (24 November) reported six-month earnings up to 25 September of £67.2 million, with a revised full-year profit expectation of £119 million, up from £109 million last year. In the same period, overall revenue has risen to £465 million, £14 million more than 2014.
However, later in the day Sky News reported that the group was asking prospective bidders, including SUEZ and private equity groups to put forward takeover offers by the end of the day.
According to the report, Biffa’s shareholders are also considering a stock market floatation in the second quarter of 2016 and would be seeking approximately eight times its annual profit – around £950 million – from any sale or stock market move.
Recent Biffa takeovers
Biffa, founded in 1912, employs more than 6,000 people and operates 2,500 collection vehicles. It was bought from water company Severn Trent plc by three investment firms in 2008 for more than £1 billion.
The three firms, Montagu Private Equity, Global Infrastructure Partners and Halifax Bank of Scotland (private equity division) converted much of the company’s debt to equity and in 2012 sold the business on to four more investment firms, Angelo, Gordon & Co; Avenue Capital Group; Babson Capital Europe Limited; and Sankaty Advisors.
The sale led to a restructuring of the company, reducing Biffa’s debt by approximately 55 per cent, from £1.1 billion to £520 million. The investment groups also provided a £75 million injection into the company to fund a new infrastructure programme.
In May, however, it was reported that Biffa had appointed financial advisory group Rothschild to prepare its listing for a public stock floatation in 2016.
The Financial Times then reported in May that the company would be valued at up to £1 billion when floated on the London Stock Exchange. Chief Executive Ian Wakelin told the paper that the floatation would provide capital to invest in new plants and international expansion, initially in Mexico, where the company is looking to open its first landfill gas site.
Despite uncertainty about ownership, Biffa has made a number of acquisitions this year, including PHS Chemical Waste, with facilities in Burscough, Stevenage and Atherstone, and Enviroco’s Chemical Treatment Division, providing a hazardous waste fleet and a waste transfer facility in Sheffield.
Biffa making most of ‘industry consolidation in a fragmented market’
Commenting on the company’s growth in revenue yesterday, Wakelin said: “Biffa, with its unique service offering, is performing strongly in competitive markets driven by ongoing regulatory and legislative requirements.
“We are also taking advantage of the drive towards industry consolidation in a highly fragmented market, and have a pipeline of exciting opportunities.
“Since a financial restructuring in 2012, Biffa has undergone a significant transformation. These results not only demonstrate the strength of the group but also provide a strong platform for continued growth, building on the group’s leading and growing market positions.”
The company offered no comment on the takeover rumours.
Find out more about Ian Wakelin’s plans for the company.
