Biffa buys Weir Waste Services for £16.2m

Waste management company Biffa has bought Birmingham and West Midlands-based waste and recycling solutions group Weir Waste Services for £16.2m, in a deal that will be funded from its existing cash and debt facilities.

In the year to the end of May 2017, Weir generated revenues of £16.1m and reported earnings before interest, taxes, depreciation and amortisation of £2.2m and operating profit of £1.1m.

Biffa said Weir, which has a workforce of around 120 people, is "highly complementary" to its existing business, combining a commercial collection business which serves approximately 1,600 customers, and operates a frontline fleet of around 45 vehicles and a substantial recycling and waste treatment operation from a seven-acre freehold site at a key location in Birmingham.

The business will be incorporated into Biffa's Industrial & Commercial division, enabling the combined business to broaden its customer offering throughout Birmingham and the West Midlands and to deliver operational and procurement benefits.

Biffa also announced three further acquisitions in the current financial year on Friday, for a total consideration plus debt taken on of £3.9m, adding annual revenue of about £4.9m. These comprise the trade and assets of H&A Recycling Limited, a commercial waste collection and recycling business in Cornwall, the trade and assets of Bisset Waste Management Limited, a commercial waste collection business in Scotland, and certain trade and assets of Vecta Group Limited, a waste collection business in East London.

All three acquisitions will also be incorporated into Biffa's Industrial & Commercial division.

Chief financial officer and chief executive Michael Topham said: "The acquisitions we have announced today demonstrate our ongoing ability to identify and execute value accretive acquisitions across the UK.

"The Weir Waste business significantly strengthens our presence and customer offer in Birmingham and the Midlands while the other acquisitions further enhance our platform in their respective markets."

Numis, which reiterated its 'buy' recommendation on Biffa, said these acquisitions are exactly in line with the company's strategy of continuing to consolidate the highly fragmented I&C sector within the UK, with its associated density benefits.

"At a time when much focus is on the two possible energy from waste (EfW) investments the group may make, today's announcement is a timely reminder of the merits of the I&C density-building strategy.

"Although net debt/EBITDA increases to 2.0x at Mar-19E as a result of these transactions, we believe Biffa retains the ability to self-fund further small transactions through the course of the year."

Peel Hunt said: "The acquisitions are a reminder that Biffa has low risk options for growth as well as the bigger energy from waste possibilities, and in our view can and should do both - we include a risked value for two EfW plants, heavily discounted given their early nature."

At 0920 BST, the shares were down 0.2% to 234p.