Macquarie lobs bid for Bingo Industries in $2.3bn takeover play

Macquarie is teaming with Sydney’s wealthy Tartak family to expand its presence in waste management with a proposed takeover of Bingo Industries.

Bingo Industries’ CEO Daniel Tartak and CFO Chris Jeffery. Picture: Jane Dempster.

Macquarie Group will team up with Sydney’s wealthy Tartak family to expand its presence in the waste management industry after the investment bank proposed a $2.3bn takeover of the listed Bingo Industries.

Bingo’s forerunner famously started with just four dump trucks bought for $1m, with chief executive Daniel Tartak behind the wheel in the early days, but executives were celebrating the deal at top eatery Cafe Sydney on Tuesday.

The company has survived a bumpy ride as a listed company when it was buffeted by a housing slowdown.

Now the founding family is heading private, alongside director Ian Malouf, who sold his Dial-a-Dump business to long-term rival Bingo, and they will come out well ahead.

The pair together hold just over 31 per cent of the register, with Mr Tartak’s stake worth more than $450m.

They will work with Macquarie Infrastructure and Real Assets (MIRA) on growing the business if the takeover is approved.

Mr Tartak plans to stay with the company, expanding the business with the bank infrastructure arm’s backing as he and Mr Malouf take a mix of cash and shares in a new unlisted company that will forge deeper into the growing waste sector.

More households and businesses are turning to waste companies, and the company is tipped to expand from its NSW and Victorian base into Queensland as big companies focus on recycling to drive efficiencies in major projects.

“This is a really exciting milestone for Bingo,” Mr Tartak said.

“MIRA’s willingness to invest more than $2.3bn in Bingo just highlights what a great company we have built, and continue to build.

“MIRA sees the underlying strength of our business model, our growth strategy and our focus on sustainability, and they want to be a part of it.

“It is a testament to the hard work of every single one of our people.”

Mr Tartak cited MIRA’s global experience in the waste and recycling sector as benefiting Bingo and flagged the company would move to capitalise on growth plays.

“I have every confidence that with MIRA’s backing, subject to the deal proceeding, we can look forward to accelerating our growth strategy,” he said.

Bingo shares leapt 6.25 per cent to $3.40 on Tuesday as the company entered into a deed with MIRA that would see the bank’s funds take the waste company ­private via a scheme of arrangement.

The battle for the listed recycling and waste management company has played out in the shadow of a global merger between French company Suez and long-time rival Veolia.

Macquarie sees the growth potential in Bingo, which has two main businesses in collecting waste and then dealing with it.

It has a truck fleet of more than 330 vehicles and holds strategic landfill assets at Eastern Creek and Patons Lane in NSW, along with a network of 15 transfer and advanced recycling facilities.

These may prove lucrative in coming years for Macquarie and add to its MIRA unit, which manages about 150 businesses, about 500 properties and 4.8 million hectares of farmland.

Bingo shareholders would have the option to receive either $3.45 cash per share, or a mixed cash and unlisted scrip alternative, which has drawn support from the Tartak family and Mr Malouf.

Mr Tartak will take the cash and unlisted scrip deal for his 19.82 per cent stake while Mr Malouf will follow suit with about 11.71 per cent.

This mixed alternative will be scaled back if more than 40 per cent of shareholders seek to take it up.

The company will declare a fully franked special dividend of up to 11.7c per share ahead of the scheme, allowing shareholders to receive up to 5c per share of franking credits.

Bingo’s independent board committee and other directors have unanimously recommended the scheme, saying it is a one-third premium to Bingo’s trading price in the month ahead of the ­acquisition coming to light and reflects an earnings multiple of 19.5 times.

Under the mixed cash and unlisted scrip alternative to the cash price, Macquarie is offering $3.30 per share, with $1.32 in cash and the remainder in unlisted units in the bank’s Recycle and Resource Holdings Limited entity.

Shareholders who go for the mix would be eligible for an ­earn-out dividend of up to 80c per share.

This is based on Bingo’s future financial performance and may be fully payable if the company hits underlying earnings of $240m or more in fiscal 2024, with smaller amounts due as long as it hits $220m.

The offer is being backed by the board in the absence of a superior proposal and subject to an ­independent expert concluding that the scheme is fair and reasonable.

Bingo independent chairman Michael Coleman recused himself from discussions on the issue as he is a non-executive director of Macquarie.

Independent board committee (IBC) chairman Elizabeth Crouch said the committee had concluded that the scheme was in the best interests of shareholders.

“The IBC has explored a number of alternatives, including stand-alone value creation opportunities and alternative bidder interest.

“After considering future opportunities for the business, along with economic, regulatory and ­execution risks, the IBC has ­unanimously concluded that the scheme is a compelling option which realises attractive value for our shareholders,” Ms Crouch said.

MIRA Asia-Pacific head Frank Kwok said the proposal recognised Bingo’s position in the ­marketplace, with a strong asset base and highly capable management team.

A scheme booklet is expected to be sent to shareholders in June and a meeting will be held in July. Bingo is being advised by UBS.