Renewi agrees takeover by Macquarie, shares jump

(Sharecast News) - Waste management firm Renewi shot higher on Thursday as it agreed to be bought by Australian investment firm Macquarie Asset Management in a £707m deal. Under the terms of the acquisition, Macquarie will pay 870p per share in cash. This is a premium of about 57% to the closing share price 27 November 2024, which was the last day before the start of the offer period.

Renewi has rejected several offers from Macquarie on the basis that they fundamentally undervalued the company, but said last November that it was "minded to recommend" the 870p a share proposal should a firm offer be made.

Chairman Ben Verwaayen said: "Renewi is a leader across Europe's recycling industry and is successfully delivering on its waste-to-product strategy. The offer represents not only a material premium for our shareholders, but also an opportunity with the support from Macquarie and BCI to further deliver on our strategy, to the benefit of all stakeholders, from employees to customers.

"We believe the consortium will be a strong steward of Renewi, building on our success to date, and we are consequently recommending shareholders vote in favour of the combination."

Martin Bradley, head of Infrastructure at Macquarie Asset Management in EMEA, said: "The European circular economy continues to advance rapidly, driven by policies that support a low-carbon, sustainable future; and long-term private capital can help to support this change.

"As a leading waste-to-product company, Renewi is well-positioned to lead in reshaping the waste market. Macquarie has been investing in and developing companies in the waste sector for more than 15 years and we look forward to partnering with Renewi in its journey as it focuses on becoming a European Leader in the Circular Economy. This strategic acquisition aligns with our commitment to innovation, enabling communities to achieve a sustainable future."

At 1240 GMT, Renewi was up 4.4% at 851.79p.

News of the takeover came alongside a third-quarter trading update in which Renewi said revenue from continuing operations rose 4.2% on the same period a year earlier to €1.3bn. This was "against a backdrop of continuing regional economic sluggishness, supported by higher volumes in Specialities and higher inbound prices in Commercial Waste," it said.

Underlying earnings before interest and tax ticked up 8.4% to €77.6m, with a strong contribution from Mineralz & Water and Specialities, together with lower SG&A costs.

Renewi said that while market conditions remain mixed, the benefits of its commercial and cost initiatives "underpin the continued expectation of solid progress" in FY25.

"We enter the final quarter with positive growth momentum which should enable the group to achieve a full year revenue performance in line with its previous expectations," it said. "Further productivity and cost initiatives are being implemented to mitigate, in part, the effect of the additional cost and market headwinds experienced in Q3, which are anticipated to persist in the remainder of the year."

The group said it remains committed to delivering on its medium-term targets of a high-single digit underlying EBIT margin and organic annual revenue growth of more than 5%.