Transpacific threatens to enter local market

Terry Peabody

If Waste Management shareholders reject Transpacific's takeover bid, then the Australian company will move into Waste Management's markets in New Zealand, Transpacific executive chairman Terry Peabody says.

Transpacific has offered Waste Management shareholders $8.642 a share under a merger proposal that has been widely criticised as a takeover in disguise.

To proceed, the deal needs the approval of 75 per cent of Waste Management shareholders at a meeting on May 17.

Peabody said if the proposal was voted down Transpacific would not try again but rather use its liquid-waste business footprint in New Zealand to launch into the solid-waste business - Waste Management's speciality.

Transpacific's speciality is liquid waste and the company has facilities and about 400 employees across New Zealand.

A Grant Samuel appraisal-report of the proposal said that Waste Management was somewhat vulnerable in the event of a no-vote, Peabody said, "because they aren't in such a strong position and they haven't had a lot of opposition there".

Transpacific had spent a lot of money developing its business here, Peabody said.

"We have operations throughout New Zealand in the liquid-waste business. We've made more than 10 acquisitions over the last couple of years ... [and] intend to make more."

As the shareholder meeting draws near, Peabody said no more money was available.

False hopes that the company would stump up more money were dangerous, he added.

"If [Waste Management shareholders] really believe that and wait until too late and keep putting this message out to the public, maybe the thing will get overthrown inadvertently and I think a lot of people will get hurt."

The share price would fall back, possibly below pre-negotiation levels, and Waste Management would find itself with a serious competitor in its home market, Peabody said.

The Grant Samuel report said there was speculation that Fulton Hogan may be considering selling EnviroWaste, which is in a joint venture with Cleanaway on the Auckland City Council domestic waste collection contract. Transpacific is shortlisted to purchase Cleanaway.

"The successful bidder for Cleanaway ... may look to acquire EnviroWaste ... which could ultimately change the competitive landscape in New Zealand and in particular the important Auckland market," the report said.

The solid waste created by Transpacific's current business was one of the synergies that the company wanted to take to Waste Management.

"We've been taking our waste to their competitors; now we could take it to them if we owned the company," Peabody said.

Peabody's use of the word "owned" highlighted a point of contention voiced by some - that the proposed merger was in fact a takeover in disguise.

Had the deal been constructed under the Takeovers Code, then support from 90 per cent of shareholders would have been needed rather than the 75 per cent required at the upcoming meeting.