Severn Trent buys Biffa
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• BET has sold its waste-management subsidiary Biffa to water authority Severn Trent for £212m. The cash will be used to reduce BET's debts.
Severn Trent was privatised in 1989. The purchase allows it to diversify from its core business in which prices are closely regulated. Biffa will not be subject to such restrictions.
The water authority outbid competitors to secure a successful business which this year made pre-tax profits of £17.8m on a turnover of £102.3m.
Severn Trent says the purchase of Biffa is a "logical fit" as water treatment and waste disposal are closely related. Although the purchase price far exceeds Biffa's earnings the authority considers its acquisition a good deal. "Waste is a very sexy industry at the moment and people are prepared to pay high prices," says a Severn Trent spokesman.
There are no plans to shed any of Biffa's 2,500 jobs and the management team is staying in place, but lan Richardson, gen eral manager of Severn Trent Waste, will join Biffa as a director, prior to STW being merged into Biffa.
Among the assets purchased are 1,000 vehicles (including tankers, collection vehicles and trucks); 26 landfill sites; 17 municipal depots; 19 commercial collection depots; and six dry waste transfer stations.
Most of the operation is UK based with about 10% of its depots and staff in Belgium. Severn Trent has financed the acquisition by borrowing. Although "cash rich" it is not permitted by law to use its own money to finance acquisitions. However, it has no other borrowings.
BET put Biffa up for sale in February as part of a strategy to achieve annual savings of £20m. At the time chairman Nicholas Wills told CM: "Biffa has enormous, but expensive, development potential."