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SYDNEY - Transpacific Industries Group has agreed to buy Cleanaway, an Australasian waste collection business, from private equity firm Kohlberg Kravis Roberts for A$1.25 billion ($1.42 billion).
KKR bought Cleanaway from Brambles Industries last year, beating off a rival bid from Transpacific. It paid about A$1 billion last June, giving it a profit of about A$250 million, a source familiar with the situation said.
KKR, part of a consortium bidding for Australian retail giant Coles Group, said it wanted to focus on growth opportunities for its logistics unit, also bought from Brambles last year, but also based its decision on the offer price.
"While Cleanaway was performing very well and on-plan, a responsible owner has to consider all offers. In this case, the valuation placed on the business recognised its strong performance," KKR Asia's Joseph Bae said.
Transpacific said the deal was struck on a multiple of 7.8 times forecast 2008 earnings before interest, tax, depreciation and amortisation (ebitda), similar to multiples on previous landfill and recycling acquisitions.
It would generate cost savings of A$50 million next year. The cost savings would increase to A$64 million in 2009, the company said.
"The Cleanaway business is an excellent fit with TPI and we are very happy that this opportunity has arisen again," said Transpacific chairman Terry Peabody, whose family has a 51 per cent interest in the company.
Cleanaway includes collection contracts, recycling facilities and landfills in Australia and New Zealand.
Transpacific said it had refinanced its existing facilities and the Cleanaway purchase with ANZ Banking Group, Commonwealth Bank of Australia and National Australia Bank.
The refinancing includes A$430 million equity and A$250 million hybrid/bond raising, it said.
KKR bought Cleanaway and Brambles' logistics unit Industrial Services for A$1.83 billion in June last year.
Transpacific had been seen as the frontrunner to win that deal.
It was Australia's largest private equity buyout at the time.
As well as pursuing Coles, KKR in November set up a A$4 billion media joint venture with Australia's Seven Network.
Transpacific last year acquired New Zealand's largest waste collector, Waste Management NZ, for $880 million.
Australian private equity company Ironbridge Capital reportedly paid about $365 million late last year for New Zealand's second-largest rubbish collection and disposal company EnviroWaste.
- REUTERS
