Greenstar UK sale receives European approval

The sale of Greenstar UK to the owners of Biffa for £135 million was yesterday (August 3) authorised by the European regulatory authorities, paving the way for the completion of a deal that could see Biffa become the UK’s second largest waste company, writes Nick Mann.

Commission
The European Commission decided that the proposed merger of Biffa and Greenstar would not close off the market to competition

Greenstar UK is being sold by Irish company National Toll Roads (NTR) to private equity investor Montagu and US group Global Infrastructure Partners, who together bought Biffa for £1.2 billion in 2008.

The proposed Greenstar deal was originally announced on June 9 2010 (see letsrecycle.com story), when NTR noted that European regulatory approval was needed for the sale to proceed.

And, it has now received that approval, under the EU Merger Regulation, with the European Commission issuing a statement confirming that: “The Commission concluded that the proposed transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.”

The Commission explained that it had come to its conclusion after examining, in particular, the “horizontal overlaps” between Greenstar and Biffa’s activity on the UK market in relation to collecting both municipal and commercial & industrial waste and recycling.

It said that, its investigation had concluded that the deal would not close off the market due to the high number of companies competing in these areas, and also the relatively low size of Biffa and Greenstar’s current market share.

“The Commission’s investigation confirmed that the proposed merger would not close off the market to competition, due to the high number of competitors with generally low market shares operating in the markets,” the Commission’s statement explained.

“Taking into account the relatively low market shares of both Biffa and Greenstar the proposed transaction does not raise vertical concerns, either,” it added.

Biffa

The deal is due to be completed by September 3, although the full implications of the acquisition in terms of how Greenstar’s assets would be integrated into Biffa’s and how it will affect contractual arrangements are yet to be revealed (see letsrecycle.com story).

There is also speculation about whether the completion of the deal could see Greenstar UK’s chief executive, Ian Wakelin, take over the post of chief executive at Biffa, which is currently being filled in an interim capacity by Mark Keough since Andre Horbach left the post in May (see letsrecycle.com story).

Speaking to letsrecycle.com today about the progress with the deal, Mr Keough said he was “pleased” with the regulator’s announcement.

“We were unable to co-operate between the two organisations until the regulator gave approval,” he explained. “Now we can sit down and plan how do we go to the market together.”

He said the company now hoped to complete the “formalities” of the deal in the next week to 10 days, and was also “anxious” to appoint a new management team.

“We have been giving this some thought already, he said, adding that the team was expected to be appointed “probably in the next two weeks sometime”.

In particular, he stressed how important the new management team would be for the task of combining the two companies’ teams, explaining that: “We can’t develop plans in a vacuum, without having the people who are responsible for implementing the plan involved.”

Job losses

Mr Keough was keen to highlight the complimentary nature of Biffa and Greenstar UK’s operations, stressing the “synergies” between the two companies’ operations.

“There will be synergies in putting the two businesses together but most will be on the revenue side and relatively small on the cost side,” he said.

Greenstar is focused on collection services, through its Verdant subsidiary, and materials recycling facilities, whereas Biffa has a significant commercial collections network and operates several landfills, as well as having energy-from-waste capacity.

However, he did acknowledge that job losses were “a possibility”, but said they would have a “relatively minimal impact” and would “perhaps be on the admin side of it”. He added: “It’s not like we’re going to close down some MRFs. We’re putting the two things together.”

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