Ian Wakelin, chief executive of Biffa, described the deal today (5 July) as another “value-creating acquisition” for the company.
Biffa paid £35.2 million cash for O’Brien Waste Recycling Solutions Holdings Limited (O’Brien WRS) “with a further contingent consideration of up to £0.9 million payable subject to the satisfaction of certain conditions.” Biffa said that the acquisition is expected to be immediately earnings enhancing for the Biffa Group.
In a financial announcement, Biffa said that as of 30 April 2017, O’Brien WRS generated annual revenues of c£34.4 million, EBITDA of c£6.6 million, operating profit of c£5.3 million and had gross assets of c£15.3 million[ii], and has c190 employees.
Last November (2016), O’Brien reported that its Waste Recycling Solutions turnover figure “was in excess of £25 million”. The business was demerged from G O’Brien & Sons, the family business, in May 2015 – the family business continues in demolition and related activities.
Revenues
The announcement continued: “O’Brien WRS is highly complementary to Biffa’s existing business. Its collection business, which serves c3,600 customers and generates revenues of c£20.7 million, will be incorporated into Biffa’s existing Industrial & Commercial collection business, enabling the combined business to operate more efficiently and enhance its customer service offering.”
It added: “In addition the acquisition brings a substantial recycling and waste treatment operation across 3 locations which serves both commercial and local authority customers and which will significantly strengthen Biffa’s infrastructure in the region. These facilities will be incorporated into Biffa’s Resource Recovery and Treatment (RR&T) divisions.”
Consolidator
Mr Wakelin commented: “As one of the UK’s largest waste management companies, Biffa is a natural consolidator, with the scale, reputation and expertise to grow and build upon our market leading positions.
“This acquisition significantly strengthens our market presence in the North East of England. We welcome the employees of O’Brien WRS to Biffa and we look forward to working together to provide a great service to our customers.”
Nathan O’Brien, managing director of O’Brien Waste Recycling Solutions, commented: “O’Brien WRS’ wide range of recycling solutions serve both commercial and local authority customers and have driven continuous, successful growth.
“The opportunity to join Biffa was a natural choice for our business due to Biffa’s scale, UK-wide network and complementary capabilities. Being part of a bigger group creates many exciting opportunities for the combined businesses.”
Personal
Mr O’Brien went on to “personally thank all of our customers for their past and future support. The management team at O’Brien and Biffa Waste Services will be working hard to bring the best of the two businesses together and to maintain excellent levels of service.
KPMG’s Corporate Finance practice in Newcastle advised the shareholders of O’Brien on the sale. Rod Wilkinson, who leads the team, commented on the transaction: “This is a significant M&A transaction for the North East given the high profile of O’Brien. The waste sector is in the midst of a period of consolidation and this is the latest and largest deal in recent months involving privately owned businesses in the region.”
Shopping centres
With the acquisition, Biffa will take on a £3 million deal won by O’Brien WRS to supply waste recycling services for intu Metrocentre & intu Eldon Square. The 5 year contract sees O’Brien supply a range of waste recycling services for the shopping centres.
And, O’Brien WRS is also active in the municipal sector – it is thought to have six materials recycling facilities. Last autumn it won a three year contract from Middlesbrough council (see letsrecycle.com story). Other work includes a six year contract from Durham county council for sorting of materials at its Sunderland plant and recently worked on a campaign to reduce contamination of material.
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