Serco in talks to sell waste arm

The Environmental Services arm was identified as ‘non-core’ to the future of the Group in November, along with its Leisure business and the majority of is private sector business process outsourcing arm.

Serco has confirmed that discussions to sell the waste services business are at an ‘early stage’ – while any deal will take ‘a number of months’ to finalise.

A spokesperson for Serco said: “We are not going to comment on speculation. As we recently announced, Serco is undergoing a detailed Strategy Review and a number of high-quality businesses have been identified as non-core to the future of the Group.

“This includes our UK Environmental Services business, which we will look to potentially sell if and when an appropriate transaction can be developed. Discussions are at an early stage. Any deal will take a number of months and would be subject to commercial negotiations and agreement by all of our customers.”

Contracts

Serco holds a number of household waste and recycling collection and street cleansing contracts in the UK, including a seven-year, £40 million deal awarded to the firm by the London borough of Havering in February, and a £48 million extension awarded by Milton Keynes council in July (see letsrecycle.com story).

Serco also holds a joint £50 million waste collection contract with Chiltern and Wycombe district councils, as well as similar contracts with Canterbury, Derbyshire Dales, and the London boroughs of Wandsworth, Bexley, and Hammersmith & Fulham.

In a strategy review published last month, Serco chief executive Rupert Soames made clear that the Environmental Services arm was ‘a good business with a strong future’ – but no longer had a place within its portfolio.

He continued that there had been a less pronounced improvement in trading than had been expected for the second half of the year, leading to a more ‘cautious view’ of 2014 and 2015.

Mr Soames added that Serco would concentrate on its core as a leading supplier of public services – an international B2G business focused on Justice & Immigration, Defence, Transport, Citizen Services and Healthcare.