The company spun off from water firm Severn Trent plc in 2006 is still prime target for investment company Montagu Private Equity.
But Hg Pooled Management Ltd has withdrawn from the expected bid of 350p per share, which would value Biffa at around £1.5 billion.
Instead, Biffa said Montagu has agreed to work together with Global Infrastructure Partners (GIP) to pursue the offer.
Speculation earlier this week had suggested GIP might make a rival bid for Biffa, despite the waste firm's agreement with Montagu and Hg that it would not recommend a rival offer. However, Biffa confirmed that instead Montagu will partner GIP, which is an investment group set up by US giant General Electric and is also backed by Swiss bank Credit Suisse.
The Biffa management board has said it would be prepared to recommend to shareholders an offer from the two bidding companies if an offer was to come forward.
However, the statement to the city stressed that the announcement about Montagu and GIP “does not amount to a firm intention to make an offer and, accordingly, there can be no certainty that an offer will be made for Biffa.”
The interested parties are currently carrying out due diligence work after Biffa agreed in December to open its books to the companies.
Statement
In the statement issued today, the company said: “Further to its announcement made on 19 December 2007, the board of directors of Biffa (the “Board”) has received notification that Montagu Private Equity LLP continues to be interested in pursuing a cash offer for Biffa and has agreed to work together with Global Infrastructure Partners (together the “Potential Offerors”) towards making an Offer for the entire issued and to be issued share capital of Biffa at a price of 350 pence per share.”
It went on to confirm: “The Board has received notification that Hg Pooled Management Limited no longer wishes to pursue making an offer for Biffa.”
Biffa shareholders have been reassured that their promised dividend of 2.3p per share, to be paid out on February 1, is safe under the new bidding arrangement.
The waste management company's most recent financial report, for the six months up to November 28, 2007, stated that its revenues were up by 4.9% to £395m with operating profit up 7.2% to £52.4 million.
The company, which claims to have 75,000 local authority and commercial customers, reported “excellent profit growth achieved from landfill”, and strong performances in power generation and in adapting to new pre-treatment regulations.
The latest annual landfill report from Bristol consultancy BDS Market Research, out this month, stated that Biffa is currently the second largest operator of landfills in the UK based on the amount of waste entering their landfill sites, behind Waste Recycling Group.
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