Waste acquisitions hit record high in 2011

Last year saw a record number of merger and acquisition deals in the waste sector despite a 15% fall in material arisings and continuing concerns around access to finance.

Growth was driven by strong overseas investment combined with a high number of acquisitions of paper and WEEE recycling companies, according to new research from Grant Thornton.

In 2011, 11 deals were made by foreign investors compared to 8 in the previous year, while seven paper recycling firms and five WEEE reprocessing companies were acquired.

According to Grant Thornton many of the deals involve corporates seeking to expand their presence in the sector and secure access and control to future feedstock levels. Other companies such as landfill operators are seeking to add value to their waste streams by diversifying.

Grant Thornton’s principal consultant Nigel Mattravers said: “We continue to see the waste space performing as a key growth sector as the legislative agenda continues to push development and growth. Securing long term supplies of consistent quality waste material is becoming a key priority for businesses.”

The growing trend towards WEEE and fibre saw a number of key deals take place. Australia based Sims Metal Management bought two UK based mobile phone and recycling companies, while Viridor purchased Martock Waste Paper and Spanish player SAICA acquired Stirling Fibre.

From an investment and borrowing perspective, drivers continue to focus on proven technology and predictable or secure supply and off-take arrangements.

However funding uncertainties continue to dominate, with investor confidence not being helped by government inconsistency over key fiscal incentives like feed-in tariffs.

Maxine Perella

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