London: It has been widely reported in the national press that Montagu Private Equity and HgCapital; had made an approach to Biffa Waste Management regarding the possibility of a cash offer for the company, though this approach was rejected.
In last Friday's trading, Biffa shares were up 24.76 percent at 275p per share on the news.
There has also been speculation that Veolia may be interested in the company.
This demonstrates the perceived buoyancy and earnings potential of waste management companies in a market driven by legislation. In particular the municipal waste market in the UK is subject to the compulsory requirements of the EC Landfill Directive which requires progressive reduction of biodegradable municipal wastes being landfilled.
In associated legislation, local authorities are the subject of a compulsory requirement to recycle and compost minimum percentages of household waste set by central Government under the Best Value Regime. Coupled with the influence of annual increases in landfill tax at £8 per tonne, Government guidance through the National Waste Strategy 2007 and Government capital aid through the private finance initiative (PFI) process – the effect is clear on the drive to recycle, compost, and recover value from municipal waste materials.
Demerger
In April 2006, parent water company Severn Trent said that it was planning to demerge its waste management business Biffa and in September of that year the company decided its terms for demerger.
At that time analysts welcomed the news, feeling that Biffa could become a bid target.
New Derbyshire IVC facility
In July 2007, Biffa announced that it had opened its new £3million in-vessel composting (IVC) plant at Etwall near Derby, as part of its ongoing development work in waste management.
The new facility was supported by a grant of £560,000 from WRAP (Waste and Resource Action Programme). It has the capacity to convert 24,000 tonnes of kitchen waste into compost every year.