Biffa auction expected as it opens books to bidders
Thursday 20 December 2007
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.
- 1 Isis burns thousands of books and rare manuscripts from Mosul's libraries
- 2 Scarlett Johansson new band 'already hit with legal complaint' from another The Singles
- 3 Husband and wife die holding hands within hours of each other after 67 years of marriage
- 4 The remarkable archaeological underwater discovery that could open up a new chapter in the study of European and British prehistory
- 5 'Jihadi John': CAGE representative storms off Sky News accusing Kay Burley of Islamophobia
Isis burns thousands of books and rare manuscripts from Mosul's libraries
Husband and wife die holding hands within hours of each other after 67 years of marriage
Mohammed Emwazi: Family of man named as 'Jihadi John' described by neighbours as 'normal Muslim family'
Mohammed Emwazi: Nine things we know about Isis militant 'Jihadi John'
Mohammed Emwazi: Man identified as Isis killer 'Jihadi John' 'stopped by MI5' while on safari holiday in Africa in 2010
Oscars 2015: Birdman beats Boyhood as Eddie Redmayne and Patricia Arquette win big - as it happened
New theory could prove how life began and disprove God
Half of Ukip voters say they are prejudiced against people of other races
'Cash for access' scandal: Sir Malcolm Rifkind says 'unrealistic' for MPs to live on £67,000 salary
Aqsa Mahmood branded a 'disgrace' by her parents after claims she recruited three UK girls flying to Middle East
This is what it's like to be dead, according to a guy who died for a bit
iJobs Money & Business
£45,000: Anna Woodward: My client is aleading global manufacturer and service ...
£13 - £15 Hourly Rate: Danielle Degan: Are you looking for a Purchase Ledger r...
£150 - £200 Day Rate: Jemma Gent: Are you as an experienced accountant with ex...
£13 - £15 Hourly Rate: George Parlour: Do you want to give something back? Th...