Shanks Group has announced a proposed merger with van Gansewinkel Groep (VGG), which it describes as a transformational deal.
Based on Shanks' closing share price of 100.5p on 28 September 2016, the proposed consideration payable by Shanks for VGG would be settled via the payment of about €286m cash, financed through new debt facilities and an equity issue of about £141m.
It would further be settled by the issue of up to about 190m new consideration shares, representing up to about 23.8% of its enlarged issued share capital following completion of the merger and the equity issue.
"The combined business will benefit customers through the provision of a broader range of services across a larger geographic area and employees through the creation of a platform for growth," said Shanks' CEO, Peter Dilnot in a statement.
"The merger has a clear strategic benefit for the Shanks Group, and the Board believes that the resulting commercial opportunities and synergies will deliver attractive long term financial returns that should significantly enhance shareholder value."
- Merger terms agreed between Shanks and VGG to form a leading waste-to-product business in the Benelux region, one of the most advanced recycling markets in the world
- Cash and share consideration payable to VGG's ultimate beneficial shareholders of €482 million, on a cash free/debt free basis
- Combined Group expected to achieve annual risk-weighted pre-tax cost synergies of approximately €40 million in the third full year following Completion
- Significant earnings enhancement expected in the second full financial year following Completion
- Merger has support from major shareholders in both companies and has positive advice from the relevant Works Councils
- Certain shareholders of VGG Topco 1 SCA (the ultimate parent of VGG), representing an aggregate of approximately 41% of its issued share capital, have irrevocably undertaken to vote in favour of the Merger
- VGG is trading significantly ahead of budget and compared to management's expectations
- Shanks overall current trading for the year to date is in line with management's expectations at constant currency; Shanks' Benelux-based divisions performing strongly
- Integration planning already underway to ensure delivery of benefits; new brand planned to be launched at Completion
- Merger is subject to Shanks and VGG shareholder approvals and anti-trust clearance, with Completion anticipated by the end of December 2016
- On Completion, customers of the Combined Group will be offered a broader range of complementary recycling technologies and services
- Combined Group has the scale, capability and technologies to deliver sustainable growth and attractive returns
- Shanks' CEO and CFO to lead the Combined Group; VGG's CEO and CFO will actively support integration for a short period post Completion.
At 9:13am: (LON:SKS) Shanks Group PLC share price was +4.25p at 104.75p