A friendly clean up in the garbage, waste removal business with the larger Cleanaway Waste Management reaching agreement to snaffle the smaller rival Tox Free Solutions for $3.425 a share in cash – which values Tox at $671 million.
With debt the bid values Tox Free at $US831 million.
Most of the cost will be funded by a $590 million equity raising through a 1 for 3.65 pro-rata accelerated non-renounceable entitlement offer. Cleanaway shares were halted yesterday to allow the raising to take place.
Tox Free shares jumped almost 20% to $3.405 but that was after an 8% leap last week that may draw the attention of ASIC, the corporate regulator.
Cleanaway is already Australia’s biggest waste management company with more than 3,000 rubbish collection vehicles, 5,000 employees, and market value of $2.5 billion. ox Free has around 1,600 employees.
The Cleanaway offer is at a 20.6% premium to Tox’s closing level on Friday of $2.84 and directors of Tox Free said they unanimously recommended that shareholders accept the Cleanaway offer.
Under the deal, Tox shareholders would be entitled to receive an interim dividend of 5 cents a share in for he December half.
Tox Free operates through four main divisions – waste services, technical and environmental services, industrial services and a medical waste business involved in re-usable sharps containers, recycling, waste auditing and substance destruction services.
It runs a total network of 29 facilities and 895 waste collection vehicles.
In 2016 it acquired the Daniels Health Australia, the market leader in medical waste collections and treatments.
Chairman Robert McKinnon said the $3.425 cash offer a share plus the interim dividend payment of 5 cents per share reflected the “strategic value of the Toxfree business to Cleanaway", along with the potential synergies available.
