Crunch point in the purchase saga of waste management group

Augean specialise in hazardous waste management including drilling waste from the oil and gas industry
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Yorkshire businesses are currently in demand, and the other purchase saga looking to take a listed company private in the region at the moment, that relating to the hazardous waste management company, Augean, has reached a pivotal point, with a result expected within the week.

Talk of a takeover at the Wetherby-based business has been around since May, with Morgan Stanley Infrastructure (MSI) tabling the first bid during the summer worth £315m, which at the time the board said it intended to recommend to shareholders.

However, in August a new bid was submitted for the business which last week said profits were up during the first half of the year. The new bid by Eleia, which comprises investment funds managed by Ancala Partners LLP and investment funds managed by Fiera Infrastructure Inc increased the offer price by 45p per share equating to a value of £341.2m.

MSI responded last week by increasing its offer via Antwerp Management (MSIP),a newly-formed company indirectly owned by funds managed or advised by Morgan Stanley Infrastructure Inc, an indirect subsidiary of Morgan Stanley, and values the business at £356.9m.

As a result Augean’s directors stated they would recommend the increased MSI offer to shareholders and withdrew their recommendation of Eleia’s bid.

However as neither of the bidding companies have declared their final offers – namely both offers may be further increased or revised – the board of the Augean has agreed with the Takeover Panel executive and both MSIP and Eleia plans to move the process to an “auction procedure”, should a “no increase” statement from either party before the market closes at 5pm on Tuesday (21 September).

The auction procedure would take place on Wednesday evening (22 September) and according to Augean’s board consist of a maximum of five rounds. Following the conclusion of the auction the Takeover Panel executive will announce the results of the auction as soon as possible but no later than 7am on Thursday when the market opens. Following this Augean’s board will provide information of their recommendation and a timetable for the transaction.

Augean is just one of the many take-private deals which are currently underway, with Bradford-headquartered supermarket Morrisons also in the midst of a buyer battle, a situation which could also be ended by auction procedure.

Explaining the prevalence of take private deals recently to Perry Yam who is co-head of the global corporate and securities practice at Mayer Brown, highlighted it was the result of sluggish growth of UK valuations compared to its international rivals.

He said: “While valuations have soared in US markets, the UK stock market has grown at a far slower pace over the last five years. This has caught the eye of private equity firms hungry for deals.”