The deal, which is due to be completed by September 3, could also see Biffa jump into second place in terms of the UK's largest waste companies, behind Veolia ES and ahead of SITA UK.
Assets
Exactly how Greenstar's assets, which include one of the largest materials recycling facilities in the UK, would be integrated into Biffa's operations have not yet been revealed. It is clear that any agreement will see Biffa grow in the municipal sector and benefit from Greenstar's infrastructure, particularly in London and Birmingham.
In the past Biffa had relatively little infrastructure apart from landfills but following a change of direction adopted after its delisting in 2008 the company is planning energy-from-waste plants and is involved in materials recycling facilities and mechanical biological treatment plants. The Greenstar purchase would add quickly to its infrastructure book.
Estimates in 2008 put Biffa's market share at about 10% with a turnover of about £500 million and some experts now put this figure as more than £600 million. Today the company is no longer listed, so figures are not readily available.
Questions have also been raised over current tenders, where Greenstar and Biffa are bidding for waste management contracts. One notable example is in Peterborough where Biffa is on the short bidding list for an incinerator while Greenstar is bidding for the materials recycling facility. Should the purchase of Greenstar go through and both win their respective Peterborough tenders, this would create a form of integrated contract with Biffa running the MRF and energy-from-waste contract(see letsrecycle.com story).
At present neither Biffa or Greenstar are commenting on the purchase because of regulatory rules. Speaking to letsrecycle.com, David Savory, director of environment and external affairs, confirmed: “There is nothing that we can disclose at the moment.”
National Toll Roads, which is an Irish company, said that it could not comment because the “deal has not been completed”.
Chief executive
Biffa is currently operating with an interim chief executive, Mark Keough, who has run a number of businesses while working for Montagu. He succeeded Andre Horbach who left Biffa at the end of May (see letsrecycle.com story) in a departure which surprised some observers.
Mr Wakelin has held a number of senior posts in the waste sector. Before 2000 he worked for UK Waste – a company owned by American waste giant Waste Management Inc – which was bought by Biffa (then owned by Severn Trent Water) for £380 million in June 2000. He is also seen as masterminding the growth and success of Greenstar UK.
Scale
A purchase of the largely waste and recycling collection and sorting-focused Greenstar comes at a time when Biffa has expressed an intention to move away from the landfill and waste disposal elements of its business to focus more on renewable energy generation (see letsrecycle.com story).
Currently, Biffa has the largest industrial and commercial collections network in the UK serving over 70,000 customers through 1,450 collection vehicles and across 128 locations. It operates two waste PFI contracts and handles seven million tonnes of waste each year.
Biffa currently operates 65 million square metres of landfill void across 24 sites throughout the UK and a renewable energy business with 103 MW of installed capacity.
Greenstar – which is based in Buckinghamshire – works across the municipal, commercial and industrial sectors and has a truck fleet of 569 vehicles. It provides collection services to 23 local authorities and over 900,000 homes and employs over 2,000 people and had reported sales of £145 million in 2009.
Greenstar also operates one of the largest materials recycling facilities (MRFs) in the UK, with its 300,000 tonnes-a-year capacity ‘super-MRF' at Aldridge near Birmingham. And, it is currently developing a second 'super-MRF' on the Atlas site at Edmonton in North London.
This would complement Biffa's plans to develop its own ‘super-MRF' network, which has seen it develop a 200,000 tonnes-a-year MRF at Trafford Park in Greater Manchester and outline plans for a facility of the same-size at Minworth just 10 miles from Greenstar's Aldridge plant (see letsrecycle.com story).
Also involved in the acquisition would be Greenstar's subsidiary waste and recycling collection contractor Verdant Group, which was purchased by the Irish firm in 2007 (see letsrecycle.com story). Verdant currently works across 25 local authorities in the UK and covers waste and recycling collections for 1,300,000 households each week.
WES Group
It shows that despite what is happening for other aspects of the economy there is still significant interest in the waste sector
Nigel Mattravers, Grant Thornton
And, the purchase will also include Greenstar's 75% stake in the WES Group of companies which specialises in the recycling of both plastics and chemical wastes as well as operating its own packaging compliance scheme, Wespack, in Redcar. Biffa has its own compliance scheme and this, in addition to Greenstar UK's other packaging producer compliance scheme Recycle 1st, based in Aylesbury, would strengthen the company's involvement in the sector. WES Group has production facilities based at the world famous Wilton International complex on Teesside and drawing on many years' collective experience in chemicals, plastics and the packaging compliance sector.
Impact
Commenting on the potential impact that the purchase could have for the waste management sector, Nigel Mattravers, waste specialist at Bristol-based accountancy Grant Thornton's Project Finance Team, told letsrecycle.com that the purchase would be “overall a positive thing”.
He said: “I don't think it is going to have a detrimental element for the market. If anything, it shows that despite what is happening for other aspects of the economy there is still significant interest in the waste sector and its moves towards renewable energy.”
Mr Mattravers said he thought the purchase would “demonstrate that people are continuing to invest in the waste sector” and added that it showed “overall confidence” for finances in the waste and recycling sector.
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