Battle for Biffa: suitors aim to gatecrash deal

A takeover battle is set to erupt for Biffa with up to three suitors close to gatecrashing a £1.2bn private equity deal accepted by the UK waste group.

Yesterday Biffa's board recommended the 350p-per-share bid tabled last year by a consortium comprising Montagu Private Equity, Global Infrastructure Partners and UCIL, a subsidiary of HBOS. However, within hours it emerged that the private equity groups Terra Firma and CVC Capital Partners, as well as the French industrial and services company Suez were considering making counter-offers.

Shares in the waste group stormed up over 12 per cent to 369.5p, making it the top riser on the FTSE 250, in anticipation that the offer would prove the starting gun for a bidding war. One trader said: "There is an expectation in the market that there will be a rival bid."

Several companies were linked with a potential bid. Terra Firma, the private equity group that owns EMI, is understood to be carrying out due diligence, while Suez is also believed to be running the slide rule over a possible bid. A source close to the French group said: "Suez has looked, but it is all at quite early stage at the moment."

CVC is also understood to be very interested in Biffa, while Macquarie has also been linked with a bid, although one source close to the Australian investment group poured cold water on the speculation.

All of the companies declined to comment.

Biffa, which has beefed up its defence team with the investment banking advisers Citigroup, JP Morgan Cazenove and Tricorn, said yesterday it had "also received approaches from third parties regarding their potential interest in making an offer". It added that the suitors had been granted access to due diligence information. A source close to Biffa's defence team said: "The feeling is that a further bid is entirely possible."

Montagu first revealed its interest for Biffa, in partnership with the private equity house Hg Capital, last November, and several weeks later the target's board announced that it had rejected a 330p-per-share bid from the consortium. Biffa's board agreed to open its books after the bid was raised to 350p per share, a 43 per cent premium to the pre-bid speculation share price.

The consortium was disrupted last month when Hg unexpectedly walked away, over concerns about the way the deal was structured. Global Infrastructure Partners, which had been expected to launch a rival bid, took its place in the consortium.

Yesterday, the board decided to recommend the bid, saying it "has not received a proposal from any third party at this stage nor can there be any certainty that a formal offer will ultimately be forthcoming from any of them".

Montagu, which already has a presence in the sector through its acquisition of Cory Environmental from ABN Amro for £588m, said it had followed Biffa since it demerged from Severn Trent in 2006. The group, which has over €3bn in funds and assets under management, was spun out of HSBC Group in March 2003.

Global Infrastructure Partners' previous investments in the UK include the acquisition of London City Airport. Global, whose total committed capital is worth $4.1bn, was founded by General Electric and Credit Suisse in 2006.

Kevin Lapwood, a research analyst at Seymour Pierce, said the offer may appear generous, but it was still not enough. "It is a start, but we do not believe this is the end of the process. There are still several infrastructure investors that would pay more and we still believe that a price closer to 400p per share is more realistic," he said.

A source close to the deal said: "The shareholders now know they've got 350p in the bank. Management is now looking to see ifthey can boost that value further."

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: SThree are a global FTSE 250 ...

Reach Volunteering: Trustees with Finance, Fundraising and IT skills

Voluntary and unpaid, reasonable expenses reimbursable: Reach Volunteering: St...

Day In a Page

Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

‘Can we really just turn away?’

Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

Nine of Syria and Iraq's 10 world heritage sites are in danger...

... and not just because of Isis vandalism
Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

Girl on a Plane

An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
Why Frederick Forsyth's spying days could spell disaster for today's journalists

Why Frederick Forsyth's spying days could spell disaster for today's journalists

The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent
Markus Persson: If being that rich is so bad, why not just give it all away?

That's a bit rich

The billionaire inventor of computer game Minecraft says he is bored, lonely and isolated by his vast wealth. If it’s that bad, says Simon Kelner, why not just give it all away?
Euro 2016: Chris Coleman on course to end half a century of hurt for Wales

Coleman on course to end half a century of hurt for Wales

Wales last qualified for major tournament in 1958 but after several near misses the current crop can book place at Euro 2016 and end all the indifference
Rugby World Cup 2015: The tournament's forgotten XV

Forgotten XV of the rugby World Cup

Now the squads are out, Chris Hewett picks a side of stars who missed the cut
A groundbreaking study of 'Britain's Atlantis' long buried at the bottom of the North Sea could revolutionise how we see our prehistoric past

Britain's Atlantis

Scientific study beneath North Sea could revolutionise how we see the past
The Queen has 'done and said nothing that anybody will remember,' says Starkey

The Queen has 'done and said nothing that anybody will remember'

David Starkey's assessment
Oliver Sacks said his life has been 'an enormous privilege and adventure'

'An enormous privilege and adventure'

Oliver Sacks writing about his life
'Gibraltar is British, and it is going to stay British forever'

'Gibraltar is British, and it is going to stay British forever'

The Rock's Chief Minister hits back at Spanish government's 'lies'
Britain is still addicted to 'dirty coal'

Britain still addicted to 'dirty' coal

Biggest energy suppliers are more dependent on fossil fuel than a decade ago