Cleanaway (ASX:CWY) - Executive Chairman, Mark Chellew
Executive Chairman, Mark Chellew
Source: Daily Telegraph
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  • Cleanaway Waste Management (CWY) has entered into an agreement to acquire Suez R&R Australia for $2.52 billion
  • The agreement is subject to finance and is expected to deliver around $70 million in annual cost synergies by the 2025 financial year
  • Cleanaway has proposed to raise equity to partially fund the transaction along with additional debt facilities
  • The company says the acquisition will deliver a portfolio of prized infrastructure assets, energy from waste development projects and the capability to create further operating leverage
  • CWY says it will seek to maintain a strong balance sheet following the acquisition
  • Shares are up 10.2 per cent, trading at $2.43

Cleanaway Waste Management (CWY) has entered into an agreement to acquire Suez R&R Australia for $2.52 billion.

Suez R&R Australia is a national waste management and environmental solutions business, operating across the waste value chain from collections to resource and energy recovery, through to treatment and disposal. Throughout 2020, the company generated revenue of $1,412 million, normalised EBITDA of $216 million and operated free cashflow of $199 million.

The acquisition is subject to finance on terms satisfactory to Cleanaway. The agreement is expected to deliver around $70 million in annual cost synergies by the 2025 financial year.

Cleanaway says the acquisition is strategically compelling and will deliver a portfolio of prized infrastructure assets, energy from waste development projects, and capability and scope to create further operating leverage.  

“Suez’s Australian Recycling and Recovery business has a high-quality network of assets across Australia that will accelerate the implementation of our footprint 2025 strategy,” said Cleanaway Executive Chairman Mark Chellew.

“The acquisition will deliver superior scale and increased operating leverage. We look forward to more than 2000 of Suez’s Australian employees joining the Cleanaway team in due course.”

Cleanaway says it will raise equity to partially fund the transaction along with additional debt facilities. Any equity raising for the Suez R&R Australia acquisition is intended to be undertaken by way of a pro rata entitlement offer to Cleanaway shareholders at the time of launch.

Additionally, Cleanaway has agreed to pay Suez a $30 million break fee if its capital raising is not successful and a $45 million break fee if the transaction does not complete due to a failure of the conditions.

The two companies have agreed that Suez may terminate the acquisition by May 6, 2021 if there is an announcement of a takeover agreement of Suez SA or if a superior offer is made and not matched by Cleanaway.

Should the acquisition be terminated and Cleanaway is not at fault, CWY will acquire a portfolio of strategic post collections assets in Sydney. The assets include two landfills and five transfer stations, to be acquired for $501 million, made up of debt and new equity.

Cleanaway says it will seek to maintain a strong balance sheet following the acquisition.

Cleanaway Waste Management is up 10.2 per cent, trading at $2.43 at 11:15 am AEST

CWY by the numbers
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