Waste management company Bingo Industries has offered to sell its Banksmeadow processing plant to ease ACCC competition concerns regarding its $578 million purchase of Dial-a-Dump.
The Australian Competition and Consumer Commission (ACCC) has aired its concerns that Bingo’s purchase of Dial-a-Dump would restrict competition within the landfill, building and demolition waste processing industry.
In August, Bingo Industries announced it intended to acquire fully integrated NSW waste and recycling business Dial A Dump Industries for $577.5 million.
The acquisition includes its Genesis Transfer Station in Alexandria, Genesis Waste Facility (landfill, materials processing facility, and recycled products processing facility) at Eastern Creek and a collections fleet of 55 vehicles.
An ASX statement last year 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.
As Dial-a-Dump owns the southern hemisphere’s largest landfill site at Sydney’s Eastern Creek, the ACCC is considering whether Bingo’s divestment proposal will adequately address their competition concerns.
The ACCC has launched a consultation process on Tuesday seeking the views of market participants on whether these issues are valid, after raising preliminary concerns in November.
The divestment if approved by the ACCC would take the form of either outright sale or a long-term lease of the land where the facility is located to a buyer acceptable to the ACCC.
ACCC Acting Chair Roger Featherson said that the commission have not indicated that they will accept the undertaking or ultimately clear the transaction.
“Consultation is just one step of the merger review process. The ACCC will continue to consider the proposed acquisition and its potential impact on customers and the market,” Mr Featherson said.
Bingo told investors the undertaking was part of its response to the regulator’s statement of issues (SOI) released on 29 November, 2018.
“We remain firmly of the view that the acquisition would not substantially lessen competition in any relevant market, including landfill and building and demolition processing,” Managing Director Daniel Tartak said.
“We have, however, offered to divest our facility at Banksmeadow to address the ACCC’s specific concern regarding building and demolition processing in inner Sydney and the Eastern Suburbs if it leads to the ACCC providing final clearance for the DADI acquisition to proceed as announced by Q1CY19.”
Mr Tartak said the DADI acquisition is transformational for Bingo and the company remains committed to working with the ACCC to reach a suitable outcome.
“We believe that this acquisition is inherently pro-competitive as it enables us to more readily compete against the larger national and international players in the industry. The recycling ecology park will provide valuable recycling and waste infrastructure for the ongoing growth of the greater Sydney region,” he said.
According to an ASX statement, if Bingo’s proposed undertaking is accepted by the ACCC and the regulator has no ongoing concerns regarding the acquisition, the Banksmeadow facility would then be divested pursuant to the agreed undertaking. The divestment would include all assets necessary to run the facility as well as the transfer of site personnel.
Should this occur, Bingo anticipates surplus funds will become available and intends to review all its options to allocate any surplus capital. This may include considering a share buy back.
The ACCC are taking submissions until the end of January before making their final decision on the divestment by 21 February.