WASTE SECTOR REPORT
Merger and acquisition fi gures set to beat last year's total as Brexit looms
AT 11pm on 29 March 2019, the UK is set to leave the European Union (EU). This is a looming reality for 66 million Brits, so it is critical all waste companies – both UK-based and international – have an understanding of how much change Brexit will create within their sector. From scrap metal to surgical operations, the waste sector aff ects everyone, covering many subsectors such as: waste management, hazardous and industrial waste, waste equipment, energy from waste (EfW), and landfi ll. Saeefar Rehman, Advisor of Energy and Environment at Grant Thornton UK LLP, produces annual end-of-year analysis reports, which give an insight as to whether Brexit could be cataclysmic, a temporary rough ride, or smooth sailing – although the latter is extremely unlikely.
Comparing fi gures
The 2017 report revealed there were a total of 50 mergers and acquisitions (M&As) of UK companies that year. Speaking in November 2018, Saeefar said: “There have been circa 47 deals so far [in 2018]. We do a full search of the press at the end of the year so none have been missed – and that normally uncovers a few. “At this point, as there is still a month or so before the end of the year, so there will probably be more in addition. I’d say we are on track this year to surpass the 50 mark.
“We haven’t got the full analysis on deal types and sectors yet, so we couldn’t say where the growth is coming from specifically.” The acquisition of international hazardous waste company Safety-Kleen Europe by Apax Partners was the largest British deal in 2017, which was said to be near £640 million. So far, out of this year’s 47 M&As, the biggest UK-based deal announced was the acquisition of Cory Riverside’s energy- from-waste plant by a consortium of investors for circa £1.5bn – more than double that of 2017’s leading acquisition.
RDF export uncertainty
Brexit-driven uncertainty of the refuse- derived fuel (RDF) export market has created a situation whereby the UK has become an ideal material processing region. However, the 2017 report
16 SHWM January, 2019
SAEEFAR Rehman, Advisor of Energy and Environment at Grant Thornton UK
highlighted a need for the UK to increase domestic waste processing, but stated the UK’s infrastructure does not have the capacity for this. Saeefar provided an end-of-2018 update on this. He said: “The time it takes for EfW plants to come online means recent trends for RDF exports will continue for the next few years. Although, there was a slowdown of export tonnages due to capacity in Europe and increasing the cost of exports. “While there’s potential for new infrastructure, many will not come to fruition due to constraints relating to funding and planning.
certain types of waste will be increasingly necessary.
“Basically, for the next 5-10 years, exporting waste and fi nding new facilities for
“This will be driven in the short term through fi nding local solutions as a consequence of uncertainty in the foreign exchange market while reducing RDF capacity in Europe.”
Key issues going forward
In 2019, the waste industry, like many others, will brace itself for a host of new legislation changes. For example, an
external producer responsibility (EPR) bill is currently passing through Parliament, which would make producers more responsible for their products' packaging. “With manufacturers becoming more responsible for collecting and re-using materials, a signifi cant proportion of materials will start to move from the waste streams. This could change the nature of the industry's service requirements: for example, local authorities and waste contractors become collection enablers of certain types of materials with the risk and pricing aspects removed entirely from the equation,” explained Saeefar.
A slowdown of legislative change
According to the 2017 report, Brexit negotiations meant legislative change aff ecting waste slowed down that year. The question now is: has the looming ‘Leave’ date accelerated this process? Saeefar added: “There have been legislative changes related to aspects of enforcement and landfi lling primarily. “Some addressing issues relating to the circular-economy principles have been given priority, but the general approach of adopting EU law as UK law on the date of Brexit remains in place and the pace of work will accelerate once the trading relationship has been clarifi ed.”
Top tips for waste processors
Although it is predicted there will be more M&As in 2018 compared to 2017, the annual reports point out how imperative it is for the waste sector to try to plan for the future, in spite of so much uncertainty. Saeefar therefore provided a few tips on this: “Up until now, EU guidance has been a large component of UK regulation. This will be less so in the future. As a result, interest from outside investors has slowed down because businesses will not go on a gut feeling.
consider the individual trading relationships that may develop with particular EU countries.”
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exports and imports from the continent will not only have to be mindful of the overall EU regulations, but should
“Waste operators reliant on
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