Resource Use

Shanks sells solid waste portfolio to Biffa for £9.5 million

Biffa Group announced today (15 October) that it will takeover the majority of Shanks Group PLC’s waste operations for £9.5 million. The deal is expected to be complete by the end of the year, subject to regulatory approval. 

The cash consideration payable for the Disposal Assets is £9.5m on a debt free and working capital free basis.

Already the UK’s largest nationwide integrated waste management company, Biffa has guaranteed that there will be no disruption to commercial, industrial or municipal service provision during the takeover period.

Founded a century ago in 1913, Biffa collects 7.5 million tonnes of waste annually. It provides collection, recycling, treatment, energy from waste and recovery services.

Shanks’ waste portfolio is intended to compliment that of Biffa’s. The increased volume will ‘enable Biffa to consolidate more waste into recycling and energy-from-waste facilities, leading to growth in its energy and processing operations’.

Shanks dismantles solid waste operations

For Shanks, this represents an effective exit from its loss-making UK Solid Waste operations.

The Disposal Assets comprise 11 facilities in England and Scotland and all of Shanks’ UK Solid Waste business with the exception of Elstow (which is being transferred to the Group’s UK Municipal business) and Kettering and Blochairn which the Group will exit separately in the near future.

This will generate expected net cash proceeds for Shanks of approximately £14m including working capital receipts, with £8m from the Disposal Assets and a further £6m million from the sale of Blochairn and Kettering.

Shanks will, however, retain its profitable Elstow facility that serves municipal customers in Bedfordshire.

Around 300 of Shanks’ employees will be transferred to Biffa under the Transfer of Undertakings Protection of Employment (TUPE).

As a result of the sale of the Disposal Assets, the Group expects to reduce the cost of its UK divisional central services by an annualised £2m.

“A progressive move” for both

Ian Wakelin, CEO of Biffa, said: “This acquisition will enable us to leverage our national infrastructure, grow our market share and enhance our leading industrial and commercial services. It is a progressive move for Biffa in line with industry trends towards consolidation to match waste volume levels.”

“Biffa has a strong platform for growth based on its reputation for excellent customer service and its infrastructure. We are pleased to be able to continue to invest in the business and enhance our position at the forefront of the evolving waste management industry.”

For Peter Dilnot, Group Chief Executive of Shanks, these are positive developments:

“These transactions deliver on our strategy of focusing on markets where we have sustainable competitive advantage and can generate attractive returns. We are exiting a market where we are sub-scale and not positioned to win, and focusing our UK operations on our growing UK Municipal and Organics businesses. 

“The combination of these businesses provides a strong platform for delivering profitable growth and generating attractive returns.”