In recent years, M&A activity within the waste management and recycling sector has proven to be consistently robust. Company deals database, Zephyr, states that UK deal volumes within the sector increased by 4% between 2015 and 2016, and with a national focus on sustainability of materials, the sector is expected to become even more popular in years to come.
New technologies have recently been developed within the sector in order to pioneer clean energy policies and fulfil an increased need to restrict greenhouse gas emissions (GHGs). A surge in waste volumes, changing waste types and reducing operational costs have driven the use of these advanced technologies along the chain of waste management and recycling. These innovations in technology, and the need to combat the issues above, are expected to drive growth in the sector and M&A in the years to come.
Private equity investment accounts for a high proportion of M&A activity within the sector, with 18% of deals involving UK waste and recycling companies in 2016 being attributable to private equity investors. Such deals bring incredibly high multiples; private equity deals involving UK-based waste firms have generated over £8.18bn in the past three years. During this time, the sector has witnessed a number of notable private equity deals, including GCP Infrastructure Investments’ £33m investment in Agrivert, the organic waste processor, and Business Growth Fund’s £10m investment in RiverRidge Recycling, a waste management business based in Northern Ireland.
UK waste and recycling companies have also proven to be particularly attractive to the overseas buyer in recent years, with Zephyr noting that 22% of UK waste and recycling acquisitions are cross border deals. Recent examples are US-based CR&R’s acquisition of Roberts Waste Disposal, a Somerset-based skip hire and disposal firm, and Swedish waste and recycling firm, San Sac Group’s acquisition of York-based Easi Recycling.
Due to the highly acquisitive nature of companies within the waste and recycling sector, a common theme has occurred in recent years, which has seen large corporations acquire multiple, smaller companies as part of a wider growth strategy. Biffa Group, the UK waste collection firm, is a prime example of this. In the past three years, Biffa has acquired five waste management and recycling companies, with disclosed deal values ranging from £2.5m to £23m. Similarly, Dublin-based plastic manufacturer, One51, has acquired four companies during this time, specialising in services such as hazardous waste management, wheelie bin manufacturing, and recycling.
M&A activity within the sector has also experienced great success on a global scale. In 2016, 850 deals involving waste management and recycling companies were completed globally, according to Zephyr. Global private equity investment in the sector is also notable, with private equity accounting for 20% of waste deals completed worldwide. The first quarter of 2017 experienced further success; 154 deals were completed during this period alone. With many more deals in the pipeline, the waste management and recycling sector is anticipated to experience high levels of M&A activity during the remainder of the year.