Biffa auction expected as it opens books to bidders

Biffa in effect put itself up for sale yesterday after agreeing to open its books to private equity bidders at the third time of asking, a move that could trigger a bidding war for the waste management company.

Hg Capital and Montagu Private Equity have twice approached Biffa about a potential takeover over in recent months and, after raising their offer price, the waste management services company has finally agreed to play ball. The private equity duo have increased the cash bid for the company to 350p a share, valuing the business at 1.23bn, or 1.6bn factoring in the company's debt. The bidders, who have yet to make a formal offer, have also agreed that shareholders will be entitled to receive the 2.3p a share dividend declared at the time of Biffa's interim results last month.

Hg, which is making the offer through its Hg Pooled Management division, and Montagu had previously offered 330p a share, which was not deemed high enough to tempt Biffa's management into allowing the private equity bidders to conduct due diligence. The offer remains highly conditional but Biffa has agreed to pay a break fee of 2m if it eventually recommends a higher offer or refuses to back the revised bid.

At 350p, the approach is pitched at a 43 per cent premium to the company's average share price over the past three months, and well above the 275p the company traded at when it was de-merged from Severn Trent in October last year.

Biffa, which announced last month that its long-serving chief executive, Martin Bettington, would leave the company in March, said: "On the basis of this proposal, the board has agreed to grant the potential offerors access to company information to allow them to complete their confirmatory due diligence."

Analysts said that the 350p bid may simply flush out other bidders. Kevin Lapwood at Seymour Pierce said: "It may appear generous but we still maintain, it's not enough. We do not believe this is the end of the process, although it is the end of Biffa as a quoted entity. There are still several infrastructure investors that would pay more and we still believe that a price closer to 400p is more realistic."

With Mr Bettington departing, Biffa is seen as a sitting duck for a takeover. The company is seen as a prime takeover target given the long-term revenue profile of waste management companies. Montagu and HG, which already hold a 2.4 per cent stake in Biffa, already have financing in place to take over the deal.

Shares in Biffa edged only 6 per cent higher yesterday following the announcement of a higher bid being lodged, to close at 338.75p, well below the agreed takeover price.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Financial Adviser

£20000 - £60000 per annum: Recruitment Genius: Are you recently QCA Level 4 qu...

SThree: Graduate Recruitment Resourcer

£20000 - £22500 per annum + OTE £30K: SThree: SThree Group have been well esta...

Guru Careers: Application Support Analyst / 1st Line Support

£25 - 30k: Guru Careers: We are seeking an Application Support Analyst / 1st L...

Guru Careers: .NET Developer / Web Developer

£45K - £55K (DOE) + Benefits: Guru Careers: We are seeking a full stack .NET D...

Day In a Page

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

Not even the 'putrid throat' could stop the Ross Poldark swoon-fest'

How a costume drama became a Sunday night staple
Miliband promises no stamp duty for first-time buyers as he pushes Tories on housing

Miliband promises no stamp duty for first-time buyers

Labour leader pushes Tories on housing
Aviation history is littered with grand failures - from the the Bristol Brabazon to Concorde - but what went wrong with the SuperJumbo?

Aviation history is littered with grand failures

But what went wrong with the SuperJumbo?
Fear of Putin, Islamists and immigration is giving rise to a new generation of Soviet-style 'iron curtains' right across Europe

Fortress Europe?

Fear of Putin, Islamists and immigration is giving rise to a new generation of 'iron curtains'
Never mind what you're wearing, it's what you're reclining on

Never mind what you're wearing

It's what you're reclining on that matters
General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence