Beijing Enterprise to buy Germany's Energy from Waste (updated)

Beijing Enterprises Holdings

04/02/2016 09:54

* Deal worth 1.8 billion euros including debt - sources 
    * Chinese shopping spree in Europe continues 
    * Beijing Enterprise beats out other Chinese groups 
    * China needs top notch waste management technology 
 
 (Adds detail, background) 
    By Arno Schuetze 
    FRANKFURT, Feb 4 (Reuters) - Beijing Enterprise  0392.HK  
has struck a deal to buy German waste management company Energy 
from Waste (EEW) for 1.4 billion euros ($1.6 billion) as China 
sets about tackling its huge problems with pollution and 
recycling more of its waste.  
    The largest Chinese acquisition of a German company to date 
shows Chinese interest in German technology remains high, and 
comes just weeks after ChemChina's acquisition of German 
industrial machinery maker KraussMaffei.  urn:newsml:reuters.com:*:nL8N14V2EM 
    ChemChina also grabbed headlines on Wednesday by unveiling 
what would be China's largest ever overseas acquisition, with a 
$43 billion bid for Syngenta.  urn:newsml:reuters.com:*:nL8N15I0H3 
    Sources familiar with the EEW transaction said it valued the 
German company at 1.8 billion euros, including debt. 
    China set a target to spend about $16 billion between 2013 
and 2016 to improve sewage disposal and garbage treatment as the 
government struggles to find ways of treating the enormous 
amounts of refuse the world's most populous country generates. 
    Government researchers have estimated as much as 7 billion 
tonnes of waste is buried around China's major cities, and the 
capital Beijing is now surrounded by a belt of landfill sites 
known disparagingly as the "seventh ring road". 
    To ease the problem, China aims to convert 30 percent of its 
rubbish to electricity by 2030, up from less than 5 percent now. 
However, plans to build waste-to-energy plants have routinely 
been opposed by residents alarmed by pollution risks. 
    EEW has state-of-the-art emissions control technology and an 
efficient garbage collection management system. It has long-term 
contracts for accepting waste and for delivering energy and 
heat. Like energy grids or pipelines, it generates stable 
returns, making it attractive to waste management firms. 
    In a rare bidding war between Chinese groups for an overseas 
asset, Beijing Enterprise beat out a consortium of China 
Tianying  000035.SZ  and Ping An  2318.HK , a consortium of 
Beijing Capital  600008.SS  and German utility Steag, as well as 
Finnish utility Fortum  FUM1V.HE .  urn:newsml:reuters.com:*:nL8N15C4JD 
    "Bids came in very close, the offer price of the runner-up 
was just two percent below that of the winner," a person 
familiar with the deal said.  
    For 2015, EEW is expected to post earnings before interest, 
taxes, depreciation, and amortisation of 190 million euros.  
    The deal values the company at 9.5 times its core earnings, 
roughly in line with the 9 times core earnings that China's 
Cheung Kong Infrastructure  1038.HK  paid for AVR when it bought 
the Dutch energy-from-waste company in 2013. 
    ($1 = 0.8965 euros) 
 
 (Reporting by Arno Schuetze; additional reporting by Chen 
Aizhu; Editing by Maria Sheahan and Mark Potter) 
 ((arno.schuetze@thomsonreuters.com; +49.69.7565.1197; Reuters 
Messaging: arno.schuetze.reuters.com@reuters.net)) 
 
Keywords: ENERGYFROMWASTE M&A/BEIJING ENT