The newly incorporated company announced last week that it is looking to purchase businesses “in the consolidating and increasingly regulated UK water and UK waste markets”.
The company was floated in the Alternate Investment Market (AIM) on September 8, raising 2 million in the process to fund the development of acquisition opportunities.
A statement from the company said it was aiming to acquire “an attractive, profitable business in each sector and use this as a platform to increase shareholder value by acquiring and consolidating further businesses in each sector”. An initial acquisition could come within six months, the company said, with further acquisitions “over an 18 month period”.
Scale
Augean said: “In the waste sector, the likely scale of the company's first acquisition is expected to be in the 25 – 100 million range, although the company will also investigate the larger opportunities in the sector.”
“The preferred target will be an established profitable business with incremental growth opportunities, preferably with specialist technical skills and the ability to act as a consolidation platform for further acquisitions in the sector,” the statement explained.
Specifically, Augean will be looking for businesses that collect waste, recycle, operate landfill sites, incinerators and peripheral activities including landfill gas collection and power generation.
Potential targets could be businesses currently forming part of groups with activities in other areas, the directors of the company said. In such cases, if Augean cannot purchase water or waste arms, it would consider buying whole groups and disposing of non water or waste assets.
Directors
The directors of the company include non-executive chairman David Williams, who previously served as chairman of Waste Recycling Group (WRG) from its public floatation in 1994, when it was worth about 8 million, until 2001 when the company was valued at 550 million. Mr Williams is currently chairman of Marwyn Investments Group.
John Huntingdon, who was previously group operations director and later managing director of WRG, will be retained as a consultant for Augean's management team.
Predictions for the waste sector are that the 5 billion sector will “double in value over the next ten years”, Augean's statement said. Much of this will come from tightening legislation and the need to recycle more waste to meet the demands of the Landfill Directive, although the company said “landfill will continue to play an important role in the country's waste management strategy”.
The company said the UK waste market is still “fragmented” with the top players SITA, Biffa, Onyx, Cleanaway and WRG representing only 38% of the overall market.
Following recent mergers and acquisitions in the sector, including the acquisitions of WRG and the landfill business of Shanks by the investment group Terra Firms and the acquisition of Hales Waste by Biffa, the directors of Augean believe that there is “significant scope for market consolidation” in both size and service offering and also in terms of geographical coverage in the UK.
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