Business | Investment
Biffa agrees to $2.3b bid but keeps its doors open
British waste-collection company says a third party was still looking at its books as shares stage a rally.
- Reuters
- Published: 00:45 February 10, 2008
London: British waste-collection company Biffa agreed to a £1.2 billion ($2.3 billion) takeover by a private-equity consortium on Friday yet left open the chance of another bid emerging.
Biffa accepted an offer of 350 pence per share from Montagu Funds, General Electric's Global Infrastructure Partners and UCIL, but said a third party was still looking at its books.
Shares in Biffa, which collects, treats and recycles waste and provides disposal services throughout Britain, rose 12.7 per cent to 369-1/2 pence.
British financier Guy Hands's buyout firm Terra Firma and France-based utility Suez are among the parties looking AT Biffa, sources familiar with the matter said, adding it was not clear whether a counter-offer would emerge.
UK-based buyout firm CVC is also in the fray, although its interest is less advanced, the sources said.
Seymour Pierce analyst Kevin Lapwood said at 350p, Biffa was valued at 23.5 times his forecast for 2008 earnings per share.
"We still maintain it is not enough. There are still several infrastructure investors that would pay more and we still believe that a price closer to 400 pence is more realistic," Lapwood said.
On January 24, Biffa said it was prepared to recommend a 350 pence proposal from Montagu and GE's Global Infrastructure Partners if they made a firm offer.
Global Infrastructure Partners had replaced HgCapital, which dropped out after an approach at 330p with Montagu failed.
Biffa, which was demerged from British water company Severn Trent in October 2006, said the third party had approached it after the January announcement.
Biffa is "a market leading business with a great workforce in a sector we understand well and where we have a demonstrable track record of success," said Montagu's Jason Gatenby.
Biffa non-executive chairman Bob Davies said the buyers' "investment plans will help Biffa maximise the opportunities presented by changing legislation to deliver growth into the medium term".
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