Cleanaway to swallow Toxfree and create waste fleet giant

Completion set for next year if $831 million deal is approved unscathed

Cleanaway to swallow Toxfree and create waste fleet giant
Cleanaway looks set to grow by more than a quarter


Waste management firm and significant fleet owner Cleanaway aims to buy smaller rival Toxfree for $831 million.

Cleanaway stands to gain 29 licensed facilities nationwide and a fleet of 895 collection vehicles, to add to its fleet of more than 2,500, from a Toxfree operation that has significant exposure both to metropolitan markets and the newly resurgent mining and resources sectors.

The takeover is being pursued during an ‘exclusivity period’ under a ‘scheme implementation deed’ and is expected to deliver about $35 million in annual synergies starting in the 2021 financial year.

"Toxfree’s Board of Directors unanimously recommend that Toxfree shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to an Independent Expert’s Report concluding (and continuing to conclude) that the Scheme is in the best interests of Toxfree shareholders," Perth-headquartered Toxfree announced to the Australian Securities Exchange (ASX).

"Each Director of Toxfree intends to vote all the Toxfree shares that he or she holds in favour of the Scheme, subject to those same qualifications."

Cleanaway sees the deal completing in the second quarter of the 2018 calendar year, subject to a range of conditions, including Toxfree shareholder, federal court and Australian Competition and Consumer Commission (ACCC) approval.

In the meantime, the pair will form a 50-50 ‘integration committee’ to meet at least monthly and likely integration costs are put at $35 million over two years.

Either side faces a bidder break fee of $6.7 million if it wishes to withdraw.

"Acquiring Toxfree will consolidate Cleanaway’s position as Australia’s leading waste management company, balancing and re-weighting our integrated waste model," Cleanaway CEO and MD Vik Bansal says.

"Toxfree complements and integrates into our operating model, enhances our business in all areas, and creates potentially significant operating leverage across all our businesses.

"The acquisition will accelerate the implementation of our Footprint 2015 strategy by adding prized infrastructure assets across the country, as well as contributing to an exciting new business in the form of a leading, vertically integrated provider of healthcare waste management products and services, including collection, transport and treatment of sharps, clinical and related waste."

To pay for the deal, Cleanaway will conduct a $590 million equity raising this month, with the rest paid through a debt facility.

In the last financial year, Cleanaway recorded a net profit after tax of $77.5 million, compared with Toxfree’s $24.1 million, while the property, plant and equipment totals were $936.5 million and $186 million respectively.


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