UK’s Biffa soars on $1.7 billion buyout proposal

By Amna Karimi

(Reuters) -British waste-management specialist Biffa said on Tuesday it has received a possible buyout offer from a private equity firm that values it at about 1.36 billion pounds ($1.69 billion), sending shares to an all-time high.

The London-listed company said the unsolicited proposal from affiliates of private equity firm Energy Capital Partners (ECP) is for 445 pence per share in cash – a premium of 37% to the stock’s last close.

Shares in the mid-cap company climbed 30% to 422 pence in early trading after Biffa said that it plans to back the bid if ECP tabled a firm offer at that price.

Other London-listed companies to attract private equity interest in recent weeks include bus and rail operator FirstGroup, power generating firm ContourGlobal and fashion retailer Ted Baker.

Biffa also said it was the subject of an enquiry by Britain’s tax, payments and customs authority over certain aspects of its landfill tax compliance over which no formal claims have been received.

“We see this as low for the quality and potential of the business, but one that risk-averse investors might choose to accept given a potentially significant tax dispute,” Peel Hunt analysts said.

The series of unsolicited proposals from ECP were evaluated with its financial adviser Rothschild & Co, Biffa said, adding that it has given ECP access to due diligence.

“This evaluation also considered the various risks the company faces including the current status of discussions between HMRC and Biffa regarding a landfill tax enquiry,” the company said in a statement.

Biffa, which is ramping up production of food grade recycled plastics, and developing energy from waste projects, said it continued to perform well and was trading in line with its expectations.

($1 = 0.8039 pounds)

(Reporting by Amna Karimi in Bengaluru; editing by Shailesh Kuber and Jason Neely)