Grant Thornton: M&A activity in waste sector picking up

29 September 2014 2 min. read

M&A activity in the UK waste and recycling sector is picking up, concludes a research from accounting and consulting firm Grant Thornton. 23 deals were completed in the first half of 2014, significantly more than in the same periods in 2012 and 2013. A rebounding economy and consolidation in the market are the key drivers for deal activity.

The first quarter of 2014 noted 12 deals, double the amount of the same period in 2012 and 2013. Also in the second quarter deal activity was higher, hinting at the fact that the M&A market is on the rise. "It's heartening to see that deal activity continues to pick up well in to 2014 mirroring the UK economy's return to strength. The nature of the deals also supports the view that larger players are meeting the demand in a fast changing and increasingly competitive market by seeking out smaller acquisitions to enhance their existing service offering,” says Mike Read, Head of Waste at Grant Thornton UK.

M&A Activity in Waster Sector

Notable deals this year include Interserve’s acquisition of Initial’s facilities management business, which at £250 million was the largest deal completing so far. Other deals in the first quarter include the sale of a number of Augean’s hazardous waste assets to Cleansing Service Group and Greenway Environmental in March. In addition Biffa acquired the commercial waste business of PHS - PHS Wastetech. “There is evidence that there is significant appetite amongst the major players to consolidate their market share by picking up smaller operators - as purchases by Biffa, Cleansing Service Group and OCS have shown."

M&A per subsector
Deals in the first half of the year reflect an even spread of the different waste subsectors – with hazardous & industrial, waste management and recycling each accounting for 30% of transactions. Energy from waste makes up the remaining 9% share. Recycling deals are slightly up on the same period last year and analysis shows increased activity in WEEE and plastic recycling – both accounting for 29% of the total.

Deals in Waste Sector H1 2014

"Interestingly, deals in the first half of the year continue the trend for hazardous/industrial and waste management acquisitions with 66% of acquisitions occurring in these sub-sectors of the market,” concludes Read.