Renewi completes divestment of UK business to Biffa

10th Oct 2024 12:54

(Sharecast News) - Waste-to-product specialist Renewi announced on Thursday that it has completed the sale of its UK Municipal operations to UK integrated waste management business Biffa.

The FTSE 250 company said the divestment, which involved a capital injection of about £125m, was a strategic move in line with its portfolio optimisation strategy, allowing it to focus fully on its core recycling operations in the Netherlands, Belgium, France, and Portugal.

It said the transaction was expected to bring significant benefits to Renewi, including an annual cash flow increase of €15m to €20m, a boost to EBIT margins by about 50 basis points, and an improvement in the group's overall recycling rate.

Additionally, it would help de-risk Renewi's balance sheet.

Post-divestment, the group's pro forma core net debt-to-EBITDA ratio stood at 2.9x, with an anticipated decrease of 0.4 to 0.5 turns annually, aiming for a 2x ratio in the medium term.

The UK municipal operations would be integrated with Biffa's existing UK waste management operations.

"We are pleased to confirm the successful completion of the divestment of UK Municipal to Biffa, bringing a positive outcome for all stakeholders," said chief executive officer Otto de Bont.

"This transaction is a transformational milestone in our strategy, allowing us to further focus on our core and profitable recycling business in Europe, as we continue to generate more value for our shareholders and increase our contribution to the circular economy."

At 1236 BST, shares in Renewi were down 0.16% at 639p.

Reporting by Josh White for Sharecast.com.