UK M&A frenzy spreads to hazardous waste

Greenthesis SpA

25/08/2021 11:08

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are their own.)
    MILAN, Aug 25 (Reuters Breakingviews) - Britain’s penchant
for M&A bidding wars is moving from supermarkets to something
rather funkier: hazardous waste. As the battle for grocery chain
Wm Morrison Supermarkets  MRW.L  heats up  urn:newsml:reuters.com:*:nL8N2PR1LB,
infrastructure funds Ancala Partners and Fiera Infrastructure
have bid https://www.investegate.co.uk/eleia-limited/rns/eleia-limited-recommended-offer-for-augean-plc/202108250700026690J
 341 million pounds for UK-listed specialist waste firm Augean
 AUG.L . The cash offer, worth 325 pence a share, is appreciably
above a headline 280 pence approach https://www.londonstockexchange.com/news-article/market-news/recommended-offer-for-augean-plc/15080904
 in July by Morgan Stanley Infrastructure.
    If the new owners can grow revenue at 8% per year as per
Refinitiv forecasts and up the EBITDA margin a few percentage
points to 34%, they could secure an internal rate of return of
20% in five years, Breakingviews calculations suggest. Or they
could hold it for longer and enjoy Augean’s stable returns.
Still, the latest bid values the target at 11 times its forecast
EBITDA, above the 9 times Italy-based waste specialist
Ambienthesis  ATH.MI  trades at, and Augean’s shares are trading
above the offer price. That implies further M&A fireworks. (By
Lisa Jucca)

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 (Editing by George Hay and Oliver Taslic)
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