Cleanaway Waste Management Ltd (ASX: CWY) has announced it has been successful with an acquisition, sending its share price higher.

Cleanaway is Australia’s largest waste management business that deals with many types of waste including general waste, recycling, industrial services, construction & demolition waste and medical waste. Cleanaway has been operating for more than 50 years.

What Is Cleanaway Acquiring?

Cleanaway announced today that it has been the successful bidder to acquire the assets of SKM Recycling Group after a public sale by KordaMentha.

The waste management business will be acquiring properties, plant and equipment an dother assets from SKM for approximately $66 million.

According to the Cleanaway announcement: “There’s a network of five recycling sites, including three material recovery facilities and a transfer station in Victoria and a material recovery facility in Tasmania.”

The properties that will be acquired have a current combined market value of around $50 million, although two properties in South Australia are not expected to be part of future operations and could be sold.

The site in Laverton North, Victoria includes an advanced plastic sorting facility which separates plastics from material recovery facilities into clean, individual polymer grades for sale or input into a pelletising facility.

Cleanaway expects to gradually restore operations in Victoria over the coming months.

Management Commentary

The Managing Director and CEO of Cleanaway Vik Bansal said: “I would like to acknowledge and thank the Victoria government who helped expedite the clearing of waste stockpiles and the return to operations at the Laverton North site through the loan provided to the receivers.

The Acquisition provides Cleanaway with a strong recycling platform in Victoria and Tasmania as part of our Footprint 2025 strategy and our mission of making a sustainable future possible. 

The recycling sector is undergoing significant structural changes with a move to increase recycling within Australia to support a transition towards a circular economy. The acquisition provides us with the infrastructure to capitalise on the growth opportunities created by these changes.”

Summary

Cleanaway seems to be happy with this acquisition and it will further expand the company’s capabilities with good network effects. At the current beaten-down share price – down 23% from a few months ago – it could be worth thinking about with waste management businesses likely to keep growing over the long term.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.