Refuse collector Biffa picks up £1.4bn bid from US private equity
BIFFA is poised to fall into the clutches of an American private equity firm a decade after a leveraged buyout took Britain’s second-biggest binman to the brink of collapse.
Energy Capital Partners, a New Jersey-based firm founded by a former Goldman Sachs investment banker, has offered 445p-a-share for the FTSE 250 company in a “possible offer” that values the business at £1.4bn.
Biffa’s board, led by former Arthur Andersen partner Ken Lever, said that it was minded to support the takeover if a binding offer was submitted.
Biffa stock closed 27pc following the announcement at 413p.
Should the take-private deal go ahead, it will draw a line under Biffa’s six-year term as a publicly traded company. It returned to the London Stock Exchange in September 2016 in one of the first floats since the UK’S vote to leave the EU.
After being spun out of Severn Trent in 2006, Biffa was taken private in 2008 when private equity firms Montagu Funds and Global Infrastructure Partners and the HBOS subsidiary UCIL outbid other suitors, believed to include Guy Hands’s Terra Firma and the French utility group Suez.
The deal quickly soured as Biffa struggled to deal with a mountain of debt injected into the company.
A protracted emergency financial restructuring, hampered by hedge funds buying and selling Biffa’s debts, was finally concluded in 2013.
An inquiry into Biffa’s landfill tax compliance could yet derail the deal. The company is forecasting a potential liability to the taxman of between £170,000 and £153m.
The company “strongly refutes” HMRC’S concerns and that it has not received a formal claim for tax.
Bin collections were cut across large parts of the UK during the pandemic as private contractors struggled with a lack of staff.
Biffa is the second-biggest refuse collection company behind French company Veolia.
The Environment Agency last July found that Biffa had broken the law by shipping more than 1,000 tonnes of soiled nappies, tins, hairpieces and plastics, as well as clothing and food packaging, to India and Indonesia – but labelled as “paper”.
Biffa said the UK did not have the infrastructure to recycle all its household wastepaper and the paper exported was 99pc pure, the same as paper recycled in the UK. It added it no longer exports wastepaper outside the OECD.
Biffa added: “The recycling industry has tried to engage with the Environment Agency on developing standards for export that reflect the realities of recycling that it can be measured against but the Agency has not cooperated.”