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Biffa PLC on Tuesday said it has received a takeover proposal, which it would be ‘minded to recommend’ should it lead to a firm takeover offer.
The waste management firm also said current trading is in line with expectations, though it is currently facing a probe related to UK landfill tax laws. While there is no guarantee a claim could be brought against it, Biffa estimated a maximum hit of £153 million, plus penalties and interest.
Biffa said it has received a series of ‘unsolicited and indicative’ proposals from private equity firm Energy Capital Partners LLC, an investor in the fields of energy transition, renewables and infrastructure.
ECP's proposal is in respect of a possible offer at a price of 445 pence per Biffa share in cash, valuing the company at around £1.36 billion. The offer is a 37% premium to Biffa's closing price of 325p on Monday.
Biffa shares were 28% higher at 417.29p each in London on Tuesday morning, giving the High Wycombe, Buckinghamshire-based company a market capitalisation of £1.28 billion.
Biffa said its board has concluded that should a firm offer be made on the same financial terms as the proposal, it would be ‘minded to recommend it’ to Biffa shareholders. It has granted ECP due diligence access.
Turning to current business, Biffa said it continues to trade well, with underlying performance being in line with the board's expectations. Volumes have remained at expected levels, and Biffa continues to mitigate inflationary pressures, it added.
‘Good progress continues to be made in delivering key strategic priorities including the integration of recent acquisitions, ramping up production of food grade recycled plastics, and developing energy from waste projects,’ Biffa added.
The company also noted it is subject to a probe from UK tax collector HMRC with respect to the waste management firm's compliance with UK landfill tax rules.
Landfill tax is a levy imposed on a firm that disposes of materials in waste sites.
‘Biffa strongly refutes HMRC's concerns. The company is fully co-operating with HMRC in relation to the Enquiry and is receiving advice from Ernst & Young,’ it said.
The company is yet to receive a landfill levy claim from the UK tax office. There is no guarantee that it will, though Biffa said there are a ‘range of outcomes’ to the matter.
A potential liability ranges from £170,000 to a maximum of £153 million, plus penalties and interest.
Due to the takeover proposal, Biffa now plans to release its annual results on June 28, and not June 16 as initially scheduled.
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