Biffa receives £1.3bn takeover offer

Biffa announced this morning that it has received a ‘series of unsolicited and indicative proposals’ from affiliates of Energy Capital Partners (ECP) LLC to ‘acquire the entire issued share capital of the company’.

Biffa truckIn a statement, Biffa stated that the proposal is for 445 pence per share – this values the company at around £1.36bn. The company said it ‘would be minded to’ recommend the proposal to shareholders, subject to the agreement of ‘other customary terms and conditions’.

This decision followed an evaluation by the company’s board and its financial adviser Rothschild and Co, considering its current value and the ‘likely value to be created by the continued delivery of its strategy’.

The evaluation also took into account the various risks faced by the company, including an active landfill tax enquiry by HMRC. Biffa stated that it ‘strongly refutes HMRC’s concerns’ over its compliance with the tax, adding that ‘to date, no formal claim for tax has been received’ and ‘there is no certainty that HMRC will bring a claim’. It will be ‘some time before the enquiry reaches a conclusion’, Biffa said.

The potential liability could range from approximately £170,000 to £153m, plus penalties and interest.

In accordance with the Takeover Code, ECP is required to either announce a firm intention to make an offer for Biffa, or announce that it does not intend to do so, by 5pm on 5 July. This deadline can be extended with the consent of the Panel on Takeovers and Mergers.

Biffa stated that ‘shareholders should note there is no certainty any offer will be made, even if the pre-conditions are satisfied or waived.’

ECP is a US private equity firm, specialising in investments in power generation, renewable and storage assets, and critical sustainability and decarbonisation infrastructure. The firm previously owned US Energy from Waste (EfW) company Wheelabrator Technologies, which has since been sold to Macquarie Infrastructure Partners. ECP’s current portfolio also holds two US recycling companies, which process tyres and batteries.

Biffa has a significant EfW portfolio, with its Newhurst and Protos facilities currently under construction. In its March trading update, the company announced that the Newhurst plant is expected to begin commissioning later this year, with commercial operations beginning in early summer 2023. Protos is set to follow 12 months later.