Biffa Share Discussion Threads

[mr.oz] 26/11/2007 07:49

Biffa reject approach on possible cash offer (26/11/2007)
London: It has been widely reported in the national press that Montagu Private Equity and HgCapital; had made an approach to Biffa Waste Management regarding the possibility of a cash offer for the company, though this approach was rejected.

In last Friday's trading, Biffa shares were up 24.76 percent at 275p per share on the news.

There has also been speculation that Veolia may be interested in the company.

This demonstrates the perceived buoyancy and earnings potential of waste management companies in a market driven by legislation. In particular the municipal waste market in the UK is subject to the compulsory requirements of the EC Landfill Directive which requires progressive reduction of biodegradable municipal wastes being landfilled.

In associated legislation, local authorities are the subject of a compulsory requirement to recycle and compost minimum percentages of household waste set by central Government under the Best Value Regime. Coupled with the influence of annual increases in landfill tax at £8 per tonne, Government guidance through the National Waste Strategy 2007 and Government capital aid through the private finance initiative (PFI) process – the effect is clear on the drive to recycle, compost, and recover value from municipal waste materials.

Demerger
In April 2006, parent water company Severn Trent said that it was planning to demerge its waste management business Biffa and in September of that year the company decided its terms for demerger.

At that time analysts welcomed the news, feeling that Biffa could become a bid target.

New Derbyshire IVC facility
In July 2007, Biffa announced that it had opened its new £3million in-vessel composting (IVC) plant at Etwall near Derby, as part of its ongoing development work in waste management.

The new facility was supported by a grant of £560,000 from WRAP (Waste and Resource Action Programme). It has the capacity to convert 24,000 tonnes of kitchen waste into compost every year.

[kallista] 25/11/2007 23:58

coogar

yes, they do tend to leak out if you issue an RNS!!

ok, there was upward movement in the price, but the initiative was with Biffa to issue an RNS saying they had been approached, not the other way round, and they could hardly issue the old "we know of no reason......."

on the other hand, do you think MontaguHg are trying to flush out any prospective counterbid to determine the strength of their hand?

pure conjecture on my part.

we may find out tomorrow.

K.

[coogar] 25/11/2007 23:35

kallista

That may well have been the plan. The bid vehicle holds 2.4%

These situations always seem to manage to leak out.

I bought into BIFF on 6th Sept. Friday's development has done wonders for my ego! :)

[wynmck] 25/11/2007 16:38

Sats Daily Mail;
"where theres muck there's brass.
Already in big demand amid speculation of a possible £1.4bn,or £4 a share cash offer from Veolia,the UKs leading environmental services roup,waste management company Biffa advanced fresh to close 64.5p better at 325p
The rise was sparked by Montagu Private Equity which revealed that the Biffa board had rejected a takeover approach wll above the prevailing market price"

[kallista] 24/11/2007 12:43

If I was going to launch a hostile bid I would have slowly accumulated 2.999%and then had a final buying spree to get as far over 3% as possible before showing my hand. Or is that too obvious?

[mr.oz] 24/11/2007 12:08

It seems strange timin to me , the RNS...
several weeks ago, they were rebuffed, at what we now believe was £3.25/share
Now , they have shown their hand , and need to aquire a stake at those levels , We have to assume they haven't been doing any of that lately, or they'd have gone over 3% and declared that. Wasted opportunity to me.
Can only assume they were forced to own up to the approach, and have imminent plans now to take this further.
Or with BIFF's results imminent, fear they'd have been outed at that.

[elmfield] 24/11/2007 11:52

do nicely.

[abcd1234] 24/11/2007 09:34

"The waste industry is regarded as highly suited to the private equity environment because of the potential long-term revenues from private finance initiative contracts to treat waste and the attraction of land fill because of the scarcity of potential sites.

The EU's landfill directive has prompted a surge in investment to meet recycling targets."

FT

[mr.oz] 24/11/2007 08:58

The price offered by the two private equity groups was thought to be close to yesterday's closing price of 325p.

Nick Spoliar, analyst at Landsbanki, said the approach was likely to lead to a bidding war.

Based on the multiples paid for Cory, Biffa could be valued at more than 400p, although that deal was before the credit squeeze in the summer.

[mitzis] 24/11/2007 07:13

No time to waste..!

[johne1] 23/11/2007 23:05

By the way, 350p would do nicely, for me - not being too greedy.

[johne1] 23/11/2007 23:04

Thanks for all the words guys. Great reasoning handycam.

watwungyi, I hope you didn't sell out. I still have my core holding, which is doing OK. However, as stated by handycam, things can keep changing. Let's face it, that's what makes it all interesting.

I didn't expect this and, I wouldn't imagine many others could have, without a crystal ball.

Let's hope the plot thickens.

The markets have cheered up over the last few days. Will that last?

Have a good weekend all.

[mitzis] 23/11/2007 21:58

Yes ygor I bet the French are watching closely..

[ygor705] 23/11/2007 21:01

Agree Mitzis......the share price spent too much time in the 320/350p range at the beginning of the year to make 350p look attractive. I suspect that the vulture funds are not the only people eyeing up Biffa.............today's RNS may well flush out further predators. Some may even have deeper pockets!

[mitzis] 23/11/2007 20:10

Talk a year ago said a bid of 450p plus that was before the recent falls I cant see shareholders accepting 350p its too low ..400p maybe.

[watwungyi] 23/11/2007 20:04

Johne1,

What the heck is going on here? I was kicking myself for taking some profit at 280. Damn it!

[handycam] 23/11/2007 19:37

Johne 1,


Don't beat yourself up about the common stock which you let go. That is part of life. I am sure that you will sell same in the future - a decision which may very well turn out to be your good fortune. Ask anyone who let go of Torex, for example.

Yours etc.,


As for price, 400p had been mooted by Geoff 'No Bid' Foster, but that, of course, was before the increased cost of funding which now prevails. So, in crude terms, the suggested take-out price plus debt at 150 basis points more than the summer rate gives c. £25m extra funding costs pa.

400p = 1421m so if the proposed earnings are down by £25m, what is the multiple of this figure which one knocks of the market cap? A maximum 10 x gives £250m divided by No. of shares (355m) which is 70pps, which in turn leaves a re-priced bid of 330p. Although the Board rejected the last bid, who is to say that Hg wouldn't go to shareholders direct with a lower bid, arguing that in a distressed market they should be grateful. So my guess is 350p and if we got close to that in the open market I would sell rather than hang on for the end-game.

Whosoever hung on to Abbot Group, SCI Entertainment, Sainsbury, Mitchell's & Butlers, Woolworths, FKI, Enodis, United Rentals and Signet lost a great deal of tax-paid cash, something they will be mindful of when they can't afford an Ipod for their children this Christmas - purely out of their own greed. (I speak from bitter experience).

[mitzis] 23/11/2007 19:09

agree its paid my xmas roll on 400p.

[wad collector] 23/11/2007 18:50

Poor week? Poor summer and autumn as far as my portfolio has been concerned , good to see something in the blue!

[elmfield] 23/11/2007 17:46

lovely. Long term holding of a few but nice after such a poor week!

[peterz] 23/11/2007 17:28

Has the offer been stated as £4?

[mr.oz] 23/11/2007 16:51

Montagu Private says Biffa rejects its offer approach


LONDON (Thomson Financial) - Montagu Private Equity LLP said Biffa PLC has
rejected the joint approach by the company and Hg Pooled Management Ltd
(HgCapital).
Montagu said it and HgCapital approached Biffa to secure a recommended cash
offer for Biffa and any offer, if made, would be at a significant premium to its
share price immediately prior to the approach on Sept 4.
Despite the rejection, Montagu said it and HgCapital are committed to
pursuing an investment in Biffa. The bid vehicle formed for the purpose of
making any offer currently holds a 2.4 pct stake in Biffa.

[rogerl] 23/11/2007 16:49

Brilliant, I am a long term holder so I am very happy