The agreement, which includes an additional cash efficiency for Cory of £1.8 million, also includes Cory’s commercial collection work in Cornwall. The business employs about 800 people.
In a statement, Cory Environmental (CEMS), which has its headquarters in London and has its flagship Riverside energy recovery plant at Belvedere, said the sale followed a strategic review. The review found the collection work was no longer “core” to the business and it is instead to focus on its infrastructure portfolio.
Bids
Several bids were put forward for the municipal business – which had reported total revenues of circa £34 million last year – and Cory claimed that these were strong bids. The company said: “The strength and quality of the CEMS business has been demonstrated by the high level of interest from bidders.”
The sale comes just six months after the appointment of a new management team at Cory which included Nicholas Pollard as chief executive and Jonson Cox as chairman.
This transaction follows directly from our strategic review. It will simplify our group structure, enabling us to invest substantially
Nicholas Pollard
Cory Environmental
Mr Pollard said: “This transaction follows directly from our strategic review. It will simplify our group structure, enabling us to invest substantially and develop our core business of providing and operating infrastructure for waste management, materials recycling, waste disposal and energy generation – in particular at our Riverside facility, one of the UK’s largest, cleanest and most efficient energy from waste plants. Biffa are a natural owner for CEMS and we wish the business every success for the future.”
‘Good performance’
Speaking to letsrecycle.com, Mr Pollard said that the “vast majority of the 800 employees will transfer to Biffa. And, he explained that one reason for the sale was that the municipal business was “scattered”. He said: “The business has had a really good performance and has great people. But, it would have taken us quite a number of years to drive it up the curve or instead we could sell the shares in it and focus on what matters most to us, with investment in energy from waste.”
Mr Pollard noted that the company’s Belvedere plant is “the cleanest facility in the UK and possibly in Europe and has a very high level of reliability. It is a strong asset and has a unique proposition because we shift the vast amount of waste for it by the river. ” He also indicated that he considered some other facilities in the UK are under pressure in terms of technology and input.
Biffa
For Biffa the purchase strengthens its collection activities as it seeks to increase its material volumes ahead of a potential sale of the company or a share listing on the London Stock Exchange. Both Biffa and Cory are owned by investment firms. Cory is currently backed by funds managed by Strategic Value Partners LLC and EQT Services (UK) Limited.
In the sale statement, it was also noted that “Biffa has extensive experience in the sector with a large portfolio of collection contracts that align well with the CEMS geographic footprint and services.”
Ian Wakelin, Chief Executive of Biffa, said: “This is an important acquisition for us. We believe that it will significantly strengthen our positions in the UK I&C and Municipal market segments, in which we already hold the number one and number two positions respectively.”
Mr Wakelin added: “This transaction provides further proof that Biffa is a natural consolidator in the industry, with the technology, scale, reputation and expertise to grow and build upon our market leading positions in the UK.”
Municipal work involved includes contracts to provide household waste and recycling services for Cornwall, Rutland, Tunbridge Wells and Lincoln local authorities.
Infrastructure
Now Cory is to invest and strengthen its infrastructure arm which, besides the Belvedere EfW plant, includes an anaerobic digestion plant in Weston-super-Mare, a number of transfer stations, a materials recycling facility at Smuggler’s Way in Wandsworth.
Cory was advised by Pinsent Masons and EY Corporate Finance.
Subscribe for free