Guy Hands landed his first deal yesterday since leaving the investment bank Nomura and striking out on his own after Waste Recycling Group agreed to a takeover bid valuing the company at £531m.
Terra Firma, the £1bn buyout fund set up a year ago by Mr Hands, is paying £315m for the shares in Waste Recycling, one of the country's biggest waste management companies, and taking on a further £216m in debt.
The deal, worth 267.5p a share, will net £144m for Waste Recycling Group's 45.5 per cent shareholder Kelda, the owner of Yorkshire Water.
Kelda said it planned to return £74m of the cash to its own shareholders and use the remaining £70m to reduce group debts.
Mr Hands entered into exclusive negotiations to buy Waste Recycling in late March but it had appeared that the deal might have slipped through his fingers after last week's deadline for signing a deal passed without agreement being reached.
He had originally offered to pay not less than 285p a share but the price came down as the negotiations wore on.
Had the deal collapsed then Waste Recycling's share price would probably have fallen to below 200p.
The offer of 267.5p a share represents a 21 per cent premium to Waste Recycling's share price the day before it disclosed it was in takeover talks and a 34 per cent premium to its price before bid rumours began to circulate in the markets.
The existing management of Waste Recycling, led by its executive chairman, James Newman, are expected to stay with the company.
Mr Hands pledged that he would bring the "greatest possible operational and strategic focus" to the company.
Sources close to Mr Hands played down suggestions that he would use the takeover to launch a bid to consolidate the UK waste management industry, which is facing a leaner period because of the economic downturn and increasing environmental burdens.
Waste Recycling currently operates 59 landfill sites and 21 waste transfer and recycling facilities and 50 per cent of its £300m turnover comes from municipal waste contracts.
It also has an energy from waste business with a capacity of 100 megawatts.
Mr Hands has until 17 August to close the deal. Should Waste Recycling or Kelda accept a higher rival offer then they will have to pay Terra Firma break fees of £3.15m and a maximum of £6m respectively.