Candover, the UK private equity house which closed its 2001 fund last year on E2.7bn, looks set to continue to make strides in the European buyout market with a £630m take-private offer for Waste Recycling Group (WRG), a UK-based landfill operator.
WRG confirmed in early January that it was in talks with an unnamed company, rumoured to be a financial buyer, over an offer for the company. Early reports suggested that a number of UK trade buyers were interested in the business, as well as UK private equity firm Permira. UK newspaper The Times reports today that sources close to the talks have identified the bidder as Candover.
Candover has so far declined to comment on the report.
Founded in the early 1980s, WRG is a leading UK waste management services company, recycling more than 11m tonnes of household, commercial and industrial waste a year. The company listed on the London Stock Exchange in 1994 and currently operates around 170 licensed waste management facilities, employing more than 800 people.
In the six months to 30 June 2002, WRG reported a 17 per cent increase in turnover to £151m. Pre-tax profits held steady for the same period at £21.7m. The company’s largest shareholder is Kelda, the company behind Yorkshire Water, which holds a 46 per cent stake.
WRG’s share price has fallen steadily over the past twelve months, underperforming the service sector by 15 per cent as investor concern grows over anticipated legislation that will put a surcharge on landfill waste programs. The share price has fallen most sharply since August, when the company announced changes to its accountancy practices.
Any offer for WRG is likely to be pitched at around 350p a share, valuing the business above the £400m mark, excluding company debt which currently stands at £230m. WRG shares are currently trading at just over 300p per share, down from a high last year of 492p.
Candover’s most recent acquisition was Ontex, the Belgium-based hygiene products manufacturer which it acquired for E625m in late November. The firm has also teamed up with Cinven to bid for Bertelsmann’s £650m scientific-publishing business, a decision on which is expected in March. The two UK firms recently joined forces on a successful E600m acquisition of Kluwer Academic Publishers from Dutch parent Wolters Kluwer.