Cleanaway launches $2.52 billion bid for Australian recycling arm of Suez

Cleanaway launches $2.52 billion bid for Australian recycling arm of Suez

A proposed $2.52 billion transaction would see Cleanaway Waste Management (ASX: CWY) acquire the Australian recycling and recovery business of France's Suez Groupe (Suez R&R Australia) if all goes to plan.

However, as Suez is currently subject to a $17.4 billion takeover offer from another French company Veolia Environnement, Cleanaway still has a few hurdles it would need to overcome.

If the deal goes ahead, Cleanaway - one of Melbourne's Top Companies - will acquire Suez's Australian portfolio of infrastructure assets including a workforce of more than 2,000 employees, six operating landfills, 59 depot facilities and a fleet of more than 1,000 vehicles.

In CY20 Suez R&R Australia generated revenue of $1.412 million.

Cleanaway's proposed acquisition may be terminated by Suez if the Veolia tender offer is successful. However, if that happens the two parties have agreed Cleanaway will acquire a portfolio of strategic post collections assets in Sydney instead.

Those assets comprise two landfills and five transfer stations and would be acquired for $501 million.

"Suez's Australian Recycling and Recovery business has a high-quality network of assets across Australia that will accelerate the implementation of our Footprint 2025 strategy," Cleanaway executive chairman Mark Chellew said.

"The acquisition will deliver superior scale and increased operating leverage.

"We look forward to more than 2,000 of Suez's Australian employees joining the Cleanaway team in due course."

Should the transaction get the green light, Cleanaway will raise equity to fund the transaction but if that isn't successful it will have to pay Suez a $30 million break fee.

A $45 million break fee is also on the table if the transaction is not completed due to the Australian Competition and Consumer Commission (ACCC) blocking the deal.

On the flip side, if the Foreign Investment Review Board (FIRB) does not approve a pre-closing restructure of Suez's water business, the French multinational will have to pay Cleanaway a $30 million break fee. 

Cleanaway's bid for Suez R&R Australia is the latest big move for the waste management company after it announced Vik Bansal would step down from his role as CEO earlier this year.

Bansal delivered the group's first half FY21 results in February and remains available to assist the board during the leadership transition.

The former CEO's resignation came just four months after the Australian Financial Review published allegations that Bansal bullied and intimidated employees at Cleanaway.

According to the AFR, Bansal was investigated in June 2020 over accusations he led a "culture of bullying and harassment", with sources claiming he would swear at staff and exclude women from promotion opportunities.

Sources who spoke to the AFR also alleged the company's board, chaired by Mark Chellew, failed to probe Bansal's behaviour for several years.

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