Fomento de Construcciones y Contratas, S.A (FCC) has acquired WRG Holdings’ waste disposal business for £1.4bn. The transaction is expected to close in Q4 this year, subject to clearance from the competition authorities.
WRG Holdings is owned by Terra Firma, which acquired the business in August 2003 for 267.5 pence in cash per share, valuing the business at around £530.9m at the time of the transaction.
Under Terra Firma’s ownership, the business has been transformed to become one of the UK’s leading waste management and energy recovery companies. It handles approximately 13 million tonnes of household, commercial and industrial waste each year and operates facilities for the reception, recycling and disposal of waste throughout the UK, including a network of waste transfer and recycling centres and a regional network of operating landfill sites. It manages nearly 70 civic amenity sites on behalf of local authorities for use by the general public. Since Terra Firma acquired the business, WRG has invested £450m in developing waste treatment facilities for local authorities and trade customers, including the Allington incinerator in Kent, and made charitable donations of approximately £10m on average per year under the landfill tax credit scheme.
The sale follows the demerger in May 2006 of WRG Holdings’ activities into distinct waste disposal and renewable energy businesses. WRG Holdings retains ownership of the renewable energy business, which is the largest pure-play renewable power generation company in the UK.
Guy Hands, chief executive of Terra Firma, said: “In 2003, we identified Waste Recycling Group as an opportunity to participate in the development of the UK waste industry, which was undergoing radical change due to stricter regulation and the greater need to develop the infrastructure that will provide the future alternatives to landfill assets.
Merrill Lynch and Deutsche Bank acted as financial advisers to Terra Firma.
Morgan Stanley acted as financial advisers to FCC.