And, its management board has agreed not to seek a rival bid for the company.
The price of 350 pence per share represents a premium of 42.9% to the average Biffa closing share price over the three months to 22 November 2007.
Statement from Biffa plc
The company said that it had received a revised offer on December 7 of 350 pence per share from the equity groups, after previous offer of 325p per share was rejected in September and a further bid of 330p was rejected earlier this month.
The bid of 350p would value Biffa at about £1.23bn. This latest offer also promises Biffa shareholders their 2.3p per share dividend as declared last month.
As a result of the revised offer, Biffa's management board has decided to grant the bidders access to company information to carry out due diligence work needed before a formal offer can be made.
Under a non-solicitation agreement, Biffa has agreed not to seek out any other offers while the due diligence work is carried out, however, this does not stop a third party offer from coming forward according to city experts.
Biffa's agreement includes an inducement fee, which would see it handing over as much as £2 million in compensation – although this fee would be capped at 1% of the company's offer value – if the management board decided to recommend selling to a different buyer, fails to recommend a bid from the two companies of at least 350p per share, or if Biffa is ultimately sold to someone else.
“Premium”
Commenting on the offer, a statement issued by Biffa said that based on advice from city experts at Citigroup Global Markets Ltd and JPMorgan Cazenove Ltd, it would be prepared to recommend the offer to Biffa shareholders.
It said: “The price of 350 pence per share represents a premium of 42.9% to the average Biffa closing share price over the three months to 22 November 2007, the day prior to the announcement of an approach by the Potential Offerors.”
The statement went on to confirm that Biffa's announcement did not amount to the equity groups issuing a firm intention to make an offer at this stage, “and, accordingly, there can be no certainty that the revised proposal by the Potential Offerors will lead to an offer being made for Biffa or as to the terms on which any offer will be made”.
The two bidding companies have the backing of HSBC and HBOS to fund their bid, and already have a 2.4% stake in the company. Montagu has already been involved with the waste management sector, having owned waste firm Cory Environmental until its sell-off for £588m in March this year.
Biffa was spun off from water company Severn Trent last year, initially at a share price of 275p, a price level that subsequently dropped to around 225p before the offer for the company was made this September. Share prices rose to 340p this morning (December 19).
The company's chief executive Martin Bettington is to step down in March 2008 (see letsrecycle.com story).
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