RENEWABLE ENERGY group NTR has agreed to sell the UK arm of its Greenstar waste management business for £135 million (€163.6 million).
Subject to regulatory approval from the European Commission, Greenstar UK will be sold to Montagu Private Equity and Global Infrastructure Partners, the controlling shareholders of leading UK waste group Biffa.
NTR, an unlisted plc, said net proceeds after the repayment of debt and disposal costs will amount to about £80 million.
This will be used to “fortify cash reserves and strategically invest in other areas” of its clean energy and resource sustaining portfolio, NTR said.
Greenstar UK was set up in 2003, with NTR providing seed capital of £2.5 million at that time. It has since invested further sums in the company, which specialises in recycling.
The sale price represents 16.5 times the UK company’s €8.2 million Ebitda (earnings before interest, tax, depreciation and amortisation) for the year ended March 2010, and 8.5 times its budgeted earnings for the current financial year.
“By any yardstick, it’s a very good multiple from an NTR perspective,” finance director Michael Walsh told The Irish Times yesterday.
The decision to sell the UK business follows a strategic review of its waste assets by NTR.
The group will retain ownership of Greenstar’s Irish and US businesses – although the Irish entity was offered for sale.
Commenting on the decision to retain Greenstar’s Irish business, Mr Walsh said: “It’s fair to say that we didn’t get the price we were looking for from the Irish business. People just didn’t see what we see in terms of its future prospects.”
Greenstar’s Irish business recently reinforced its position as the country’s largest waste management group with the acquisition of rival Veolia’s business here.
Mr Walsh said the US division had a “very rough time” in 2008 as a steep decline in commodity prices affected its recycling activities. “But it’s well on the road to recovery,” he added. “It’s back in profitability, and growing.”
Greenstar UK has 569 trucks that provide collection services to 23 local authorities and more than 900,000 homes.
It employs more than 2,000 people, and reported sales of £145 million in 2009.
Biffa has the largest industrial and commercial collections network in the UK, serving over 70,000 customers. It handles 7 million tonnes of waste each year and processes about half a million tonnes of recyclables.
