Bingo Industries to acquire Dial A Dump Industries

Bingo Industries has announced it will acquire fully integrated NSW waste and recycling business Dial A Dump Industries for $577.5 million.

It comes as Bingo Industries released its full-year results (more to come on this). According to an ASX statement, consideration for the acquisition will comprise $377.5 million in cash and $200 million in Bingo shares to be issued to vendors of Dial A Dump Industries Group (DADI Group) after the acquisition is completed.

The acquisition will be funded by an underwritten 1 for 2.48 $425 million pro-rata accelerated non-renounceable entitlement offer and $200 million scrip consideration to DADI vendors, priced at $2.54 per new ordinary share.

DADI Group generated financial year 2018 revenue of $198.2 million and earnings before interest, tax, depreciation and amortisation of $51.6 million.

Ian Malouf, the largest vendor of DADI will join the Bingo board after the acquisition is completed with a shareholding of up to 12 per cent post completion of the entitlement offer and acquisition.

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The acquisition includes its post-collection assets, including Genesis Waste Facility at Eastern Creek, a recycling and landfill asset with approved capacity of up to two million tonnes per annum and remaining useful landfill life of about 15 years.

The ASX statement said DADI has strong future growth opportunities through exposure to favourable NSW infrastructure markets and structural shifts towards recycling.

It said there would be compelling future growth opportunities, including the opportunity to develop a Recycling Ecology Park in Eastern Creek aligned with Bingo’s strategy of further diversifying into putrescible, commercial and industrial and municipal solid waste and waste post collections.

The statement said it also provides economic benefits through volume growth and internalisation of 100 per cent of Bingo’s non-putrescible building and demolition and commercial and industrial waste, with significant landfill capacity for external customers and broader coverage of revenue from the excavation and demolition phases of the construction process.

CEO Daniel Tartak has committed to invest a further $72 million to take up 100 per cent of his entitlements, while Tony Tartak, the founder of Bingo and Mark Tartak have separately committed to invest a further $9 million each.

CEO Daniel Tartak said the DADI site at Eastern Creek provides Bingo with the opportunity to transform waste recovery and recycling in greater Sydney through the development of a Recycling Ecology Park.

“The Recycling Ecology Park, once completed, will considerably broaden our range of processed end products as we work towards building a circular economy. By seeking alternative waste solutions, we can enhance recovery rates, consistent with Bingo’s strategic intent of diverting waste from landfill through recycling led solutions,” he said.

Dial A Dump founder Ian Malouf said the company has a lot of respect for Bingo and how they have built their business.

“Bringing together these two Australian companies makes complete sense. I fully support Daniel Tartak the CEO and Bingo’s growth strategy, particularly the vision of a master site at Eastern Creek that can process all waste types. With the infrastructure program in NSW and the new waste levy in Queensland, the market is only going to grow and I’m excited to be on board for the journey,” he said.

Bingo expects to deliver run-rate synergies of $15 million per annum to be realised over two years, from internalisation of waste volumes, operational efficiencies and rationalisation of overheads.

The acquisition remains subject to customary closing conditions including Australian Competition and Consumer Commission informal merger clearance.

Cleanaway agrees to acquire Tox Free Solutions

Cleanaway has agreed to acquire Tox Free Solutions (Toxfree) for about $671 million.

Cleanaway is offering $3.425 for each Toxfree share and the integration of the business is expected to deliver about $35 million in annual synergies over a two-year period. Toxfree shareholders will be able to receive a 5c a share interim dividend.

To fund the acquisition, Cleanaway will launch a fully underwritten $590 million 1 for 3.65 pro rate accelerated entitlement offer and draw down debt from a new multi-tranche facility.

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In a statement, Toxfree board of directors reportedly unanimously recommended that shareholders vote in favour of the scheme, and will vote the shares they own or control in favour of it, in the absence of a superior proposal.

Cleanaway Chief Executive Officer Vic Bansal said acquiring Toxfree will consolidate Cleanaway’s position as Australia’s leading waste management company, balancing and re-weighing its integrated waste model.

“The acquisition will accelerate the implementation of our Footprint 2025 strategy by adding prized infrastructure assets across the country, as well as contributing 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,” he said.

The scheme consideration values Toxfree’s fully diluted equity at approximately $671 million. The transaction will be subject to standard regulatory conditions, including Australian Competition and Consumer Commission approval. A scheme booklet, independent expert’s report, reasons for the directors’ recommendation and details of the scheme will be prepared and provided for review to the Australian Securities and Investments Commission for review, expected in February 2018.

Toxfree expects to update the market on an indicative timetable in January 2018.