In response to a planned takeover offer from Macquarie last week (see letsrecycle.com story), Renewi set out its reasonings for why it would reject the offer.
This included revealing its ongoing “comprehensive review” of its UK municipal business, which includes six contracts: Argyll and Bute, Barnsley Doncaster and Rotherham, Cumbria, East London, Elstow and Wakefield.
The response last week said about the review: “The company is actively exploring a range of options to achieve an exit from this segment, with an outcome targeted during the first half of 2024.
“The board believes the company’s ongoing exposure to this segment is a key impediment to shareholder value creation and believes significant operational, financial and capital allocation benefits will be derived from delivery of a successful exit.”
Renewi posted a loss of €9.2 million (£7.9 million) on its UK municipal contracts in its 2021/22 financial results, down from £16.5 million the previous year. The UK municipal segment for Renewi has been loss-making for a number of years.
Trading update
While Renewi said in its trading update that the UK municipal business performed slightly ahead of expectations in the first half, benefiting from stable operational performance, it also noted the review.
The trading update said Renewi has an “attractive base business with strong growth and margins”. It said in the near term, the group is taking definitive steps to optimise its portfolio, with a particular focus on two businesses:
- The strategic review of the UK municipal business, with an outcome targeted for the first half of 2024; and
- Continued performance enhancement in the M&W business
UK
In May, Renewi had said it sees scope for UK expansion and the London-listed company also opened a new HQ in Milton Keynes back in March (see letsrecycle.com story).
Renewi, which was formed in 2017 following the merger of Shanks and the Van Gansewinkel Groep, noted at the time that the UK is a “challenging market”, but said the move shows the company is willing to invest in its staff.
In an interview with letsrecycle.com at the opening, Mr de Bont and James Priestley, managing director of the UK specialities division, spoke about the company’s plans for the UK. While the company is ready to invest in facilities, this can only be done “if the taxonomy and legislation is correct”. The pair called for government to provide “clarity” on its plans for the waste sector to enable this investment to take place.
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