Biffa snaps up Shanks for £9.5m

Shanks has agreed to sell the majority of its UK solid waste business to Biffa. The purchase, set at £9.5m and subject to regulatory approvals, is due to be completed by the end the year.

Shanks has also announced that processes are underway to sell its Blochairn and Kettering materials recycling facilities. It will retain its “profitable” Elstow facility, which serves municipal customers in Bedfordshire.

Shanks group chief executive Peter Dilnot said the company is “exiting a market where we are sub-scale and not positioned to win”.

“These transactions deliver on our strategy of focusing on markets where we have sustainable competitive advantage and can generate attractive returns,” he said.

In a video on the company’s website, Dilcot said the move represents a “clean break” from solid waste operations in the UK and will allow the group to refocus its UK activities in municipal and organics.

Dilcot said that Biffa has the “scale and national coverage” to take on the solid waste operations.

Biffa, which already collects and processes 7.25m tonnes of waste a year, said the acquisition will be “complementary” to the company’s portfolio, growing its market share and enabling it to enhance services and “realise profitable synergies”.

The increased volume will enable the company to consolidate more waste into recycling and energy-from-waste facilities, leading to growth in its energy and processing operations.

In January, the High Court approved a £1bn restructuring of Biffa, which cut the company’s debt by 55% and injected £75m in cash to fund a significant infrastructure investment programme. This new money is enabling the company to implement its planned investment programme of over £250m in the group over the next five years.

Biffa CEO Ian Wakelin said the purchase from Shanks is a “progressive move”.
Integration of the Shanks business is likely to take a number of months, but there will be no disruption to services during this period, he said.

For its £9.5m Biffa is getting 11 facilities in England and Scotland and all of Shanks’ UK Solid Waste business with the exception of Elstow and Kettering and Blochairn.

It is expected that Shanks will benefit from an additional cash inflow of approximately £3m. The net cash inflow for Shanks upon completion of the sale and after transaction and restructuring costs is expected to be approximately £8m.

As part of the transaction, approximately 300 employees will transfer to Biffa under Transfer of Undertakings Regulations.

edie staff

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