CWY – UBS rates the stock as Neutral

Cleanaway Waste has announced the potential acquisition of the Suez Groupe recycling & recovery business in Australia for $2.52bn. The transaction is conditional and Suez may terminate the transaction by April 26 if a superior offer is received.

A separate transaction has been negotiated for the acquisition of two landfills and five transfer stations in Sydney for $501m. UBS believes the smaller acquisition will fill a gap in the post collections portfolio across NSW.

The broker suspects Cleanaway may need to use $1.5bn in new equity funding to keep its leverage under a target of 3x for the main acquisition. In terms of the smaller one, debt is likely to fund the transaction. Neutral rating and $2.35 target retained.

Sector: Commercial & Professional Services.


Target price is $2.35.Current Price is $2.43. Difference: ($0.08) – (brackets indicate current price is over target). If CWY meets the UBS target it will return approximately -3% (excluding dividends, fees and charges – negative figures indicate an expected loss).



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