WRG agrees £1.4bn sale to Spanish firm
Northampton-based waste management business, Waste Recycling Group Holdings, is to sell its waste disposal business (WRG) to leading Spanish construction and services group Fomento de Constr-ucciones y Contratas (FCC), for £1.4 billion.
The transaction, which is expected to close by the end of this year subject to clearance from the competition authorities, follows the demerger in May of WRG Holdings’ activities into distinct waste disposal and renewable energy businesses.
It will leave WRG Holdings’ owner, Terra Firma, with its waste-to-energy business, which is the largest pure-play renewable power generation company in the UK.
While FCC has indicated that it plans to use the acquisition to build Europe’s leading waste management firm, it is yet to release details of its future plans for WRG in the UK, including that of its staff and projects such as the £90m waste recycling and energy centre planned for Norwich.
Upon completion of its acquisition, FCC will become a leading player in the waste management sector in the UK, significantly enhancing its existing presence through its wholly owned subsidiary Focsa.
In combination with its current presence in Spain, where FCC is the leader in the waste management sector, and the recent acquisition of ASA, a prominent waste management player across Europe, the acquisition of WRG will position FCC as one of the leading Pan-European waste management operators.
Rafael Montes, chief executive of FCC, said: “Through the acquisition of WRG, and with the support of its outstanding management team, we will become one of the leading UK waste management operators.
“Our ambition is to become a European leader in the waste management sector. With the acquisition of WRG, added to our leading presence in Spain, Portugal, and Central and Eastern Europe, we believe we are achieving this goal.
“In our new Strategic Plan approved by our Board in April 2005, and supported by FCC’s major shareholder, Esther Koplowitz, we identified the UK waste management sector as one of our key priorities for growth.
“We have been present in this market for more than 15 years through our subsidiary Focsa.”
FCC is one of Spain’s leading construction and service groups in terms of both business volume and profitability. The group’s activities are highly diversified with 53 per cent of its revenues generated from activities other than construction, most notably solid waste collection and disposal, water supply, water treatment, cement manufacturing and real estate development.
In 2005, FCC reported revenues of 7.1bn euros (£4.8bn), of which 2.8bn euros (£1.9bn) corresponded to its Services division. Approximately 10 per cent of its revenues correspond to the group’s international activities, which are mainly carried out in the EU, the USA and Latin America.
Waste Recycling Group’s chief executive, Jim Meredith, said: “I am delighted that for the next stage in our development we will have the best possible strategic partners in FCC, with more than 100 years of experience and a leadership position in the Spanish waste management business, who have committed to maintain the existing employment rights of WRG’s staff.”
Terra Firma’s chief executive, Guy Hands, added: “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.
“Today, the business is transformed into a leader in its sector with a strategic and operational discipline. I am delighted that we have found new owners for the business who will invest further in its exciting prospects.”
WRG 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.
Meredith said: “This has been achieved with the support of Terra Firma, who have worked with us to deliver a number of strategic and operational initiatives to meet our customers’ requirements.
“Under Terra Firma’s ownership, 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, as part of our belief that we have a responsibility to the communities we serve.”