Waste Giant Biffa Invites £1bn Takeover Bids
One of Britain's biggest waste management groups is running a secret process to sell itself for as much as £1bn as it prepares to unveil an improved set of half-year results.
Sky News has learnt that shareholders in Biffa, one of the industry's most prominent names, have asked prospective bidders for the company to table offers by the end of Tuesday as they continue to monitor market conditions for a stock market flotation.
A number of industry rivals - including Suez - and leading private equity groups have been invited to bid for Biffa, although their appetite to pursue a takeover was unclear on Monday.
The potential change of ownership comes three years after financial problems prompted a takeover by Biffa's lenders.
On Tuesday, the company will announce that half-year earnings before interest, tax, depreciation and amortisation rose by 19% to £67.2m, with full-year profit expectations revised upward to £119m.
Insiders suggested that Biffa's shareholders would seek approximately eight times annual profit from a sale or flotation, equating to a valuation in the region of £950m.
The company, which employs more than 6,000 people, believes that growing demand for recycling services across the UK justifies such a price tag, which would be at a discount to Shanks, its listed peer.
Biffa operates one of the most recognisable fleets of branded vehicles in the country, with 2,500 waste collection trucks, some of which are powered by biofuel from waste cooking oil.
The company's March year-end means that a flotation based on audited results would not take place until the second quarter of 2016.
As well as the precise timing and valuation of a float, it is uncertain whether Biffa will need to make significant adjustments to its board before attempting to go public.
Once part of Severn Trent, the water company, Biffa was spun out into a separate listed business before being taken over by a consortium comprising HBOS, the high street lender, Global Infrastructure Partners and Montagu Private Equity, just before the financial crisis.
In 2008, Biffa was valued at £1.7bn including debt, but a restructuring deal agreed in 2012 wiped out much of the company's borrowings and saw senior lenders take control of the company.
Current customers in the commercial market include J Sainsbury, Royal Mail and Pret a Manger, while in the domestic rubbish collection sector, Biffa is the second-largest player behind Veolia.
In an interview earlier this year, Ian Wakelin, Biffa's chief executive, said a return to the stock market was a logical option.
"I think it would be well-positioned in the public arena. There's only one other publicly-quoted company in the environmental services sector in the UK, which is Shanks Group," he said.
"I do think that Biffa back in public hands would be an attractive investment, particularly with its growth potential. I think it would be a good place for the company to end up. For me, the most natural home for this business is back in the publicly quoted environment."
Biffa's main shareholders are now the hedge funds Angelo Gordon, Avenue Capital and Sankaty Advisors, although Mr Wakelin and his senior management team also own some shares in the company.
They are being advised by Rothschild, the investment bank.
A Biffa spokesman declined to comment.
