London: There has been much speculation that a new bid for Biffa, the waste services company, could come from a consortium involving Terra Firma and Suez.
Biffa recently accepted a bid of 350p per share valuing the company at £1.2 billion, from Wasteacquisitionco, a consortium of Montagu, Global Infrastructure Partners Funds and UCIL - the consortium being led by Montagu Private Equity and GIP. However following news of a potential new bid, share prices rose to over 370p before falling back slightly to close at 368p on Friday.
Suez is the French, international industrial and services Group, which says it designs sustainable and innovative solutions in the management of public utilities. The Group is involved in electricity, natural gas, energy services, water and waste management and has 140,000 employees worldwide.
Earlier this month, Michelin and Suez, through its subsidiary SITA France, announced a project to create an industrial materials end-of-life recycling center at Michelin’s Toul manufacturing site.
SITA UK – a subsidiary of Suez - is a major player in the waste market and there would be obvious synergies should Biffa come under the same umbrella. These synergies suggest a reasonable potential increase on the currently accepted bid may be possible, and the current share price reflects a degree of expectation.
Terra Firma, a private equity company set up by Guy Hands in 1994, describes itself on its website as specialising in “buy-outs of large, asset-rich and complex businesses that are under-performing or in need of a change in direction” - though there is no suggestion that Biffa falls into these categories.
EMI was acquired last year by Terra Firma, following a period when EMI's revenue had declined due to the structural shift in the consumer music market.
In April 2006, 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.
Both Suez and Terra Firma have so far declined to comment.