US investor eyes major UK scrap company

One of the UK’s biggest waste managers, Biffa, has indicated it could be taken over and would recommend a deal if talks result in a firm offer.

A statement from the board says it has received a series of ‘unsolicited and indicative proposals’ from Energy Capital Partners (ECP), a US-based investor in energy infrastructure. Reuters says the quoted ECP offer values Biffa at £1.36 billion (EUR 1.59 billion).

‘Following a period of discussion and negotiation, ECP’s proposal is in respect of a possible offer at a price of 445 pence (EUR 5.20) per Biffa share in cash,’ the statement says. ‘The board of Biffa has concluded that should a firm offer be made on the same financial terms as the proposal it would be minded to recommend it to Biffa shareholders, subject to the agreement of other customary terms and conditions.’

The company statement references progress on Biffa’s potentially costly dispute with the UK Treasury over alleged mis-description of waste sent to landfill, which the company rejects. It says there is no certainty that Her Majesty’s Revenue and Customs will bring a claim and it is not possible ‘to ascertain the quantum of any potential liability with any certainty or precision’.

Biffa adds: ‘The potential liability could range from approximately £170 000 (based on the liability declared by Biffa to HMRC following an extensive review with Ernst & Young) up to a possible maximum of approximately £153 million (being the total amount of protective assessments issued by HMRC to Biffa for the period from March 2016 to March 2020) plus penalties and interest.’

Biffa was founded in London in 1912 and employs 10 000 people. It collects waste from thousands of businesses and millions of households across the UK and has diversified in recent years, adding plastic recycling and energy-from-waste facilities to its portfolio.

ECP was founded in 2005 Doug Kimmelman who headed Goldman Sachs Power Investing in the 1990s. The company has previously invested in the UK, owning energy-from-waste operator Wheelabrator between 2014 and 2018.