7th Jul 2016 10:07
LONDON (Alliance News) - Waste management company Shanks Group PLC on Thursday confirmed a deal to merge with Netherlands-based waste collection and recycling company Van Gansewinkel Groep BV, a move it said would create a leading player in the Benelux waste management segment.
Shanks said the merger, which values the Dutch company at EUR440.0 million, would make the combined company a leading waste-to-product business in the Benelux region, where significant investment has been put into recycling facilities. The deal also would give Shanks greater access to other European Union markets, in particular to tap specialist recycling technologies segments.
The deal would bring together two complementary businesses, Shanks said, given its relative strength in the construction and demolition industries and Van Gansewinkel's strong presence in municipal waste collection.
Shanks added the combination of the companies would provide their respective customer bases with access to a broader range of waste-management technologies, citing its expertise in hazardous and organic waste and Van Gansewinkel's in glass and electronic goods recycling.
Shanks had flagged talks between the two companies in late May and shares in the company were suspended at the time as the deal would constitute a reverse takeover. Shares in the company were restored to trading on Thursday morning after it unveiled the merger talks and promptly fell 11% at the open. By mid-morning, however, Shanks shares were up 0.4% to 80.85 pence.
Under the terms of the deal, Van Gansewinkel shareholders would get EUR306.0 million in cash and the balance in shares in Shanks. After completion, Van Gansewinkel shareholders would own 29% of the combined company.
The UK group said a number of synergies could be achieved under the deal, including cutting costs by optimising logistics routes and rationalising sites. The increased scale of the business would help procurement capabilities as well, Shanks said.
Shanks said the combination would accelerate the development of the two businesses through sharing best practice in certain commercial areas. This, Shanks said, would increase the segmental focus of the business, raising the potential to deliver incremental revenue synergies across the business.
"We are delighted to have reached agreement in principle with VGG on the terms of a proposed merger. This is a truly transformational deal for Shanks. Our two businesses are highly complementary and a combination would create a leading Benelux waste-to-product business, with enhanced geographic coverage, capabilities and technologies as well as significant synergy potential," said Shanks Chief Executive Peter Dilnot.
Shanks added trading in its current financial year, to the end of March 2017, has started well and is tracking slightly ahead of the company's expectations. Its Commercial division made a strong start, supported by higher construction and demolition activity, a recovery in recyclate prices and self-help benefits.
Hazardous waste has also made an encouraging start, Shanks said, with good soil and water processing volumes. This has offset a more challenging start for the Municipal arm.
Shanks added the fall in sterling against the euro precipitated by the UK's vote to leave the European Union would prove a net positive for the company in translating euro-denominated revenue into pounds.
By Sam Unsted; [email protected]; @SamUAtAlliance
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