Bingo cleared by ACCC for Dial A Dump deal
Waste operator Bingo has won ACCC approval for its $577m takeover of rival Dial A Dump, subject to an asset sale.
Waste management operator Bingo Industries has received clearance from the competition regulator for its $577 million takeover of rival player Dial A Dump Industries, on the condition it sells a Sydney processing facility.
The Australian Competition and Consumer Commission had flagged issues with the deal in late November and its effect on competition in waste processing, landfill and collections in eastern and inner city Sydney.
The acquisition includes the Eastern Creek plant - the biggest landfill and waste recycling plant in the southern hemisphere - with capacity of up to two million tonnes a year and 15 years of landfill life remaining at the site.
However, the ACCC concluded the takeover would not harm competition.
“The transaction raised a number of significant concerns. Ultimately, we have concluded that the proposed acquisition, taking into consideration the divestiture undertaking, would be unlikely to substantially lessen competition in any market,” ACCC Chair Rod Sims said.
Bingo also says it will launch a $75m share buyback on March 15. It expects cost synergies of $15m per year through internalising waste volumes and rationalising overheads over two years.
Bingo had previously offered to offload its Banksmeadow processing operation in Sydney in a bid to win regulatory clearances, with any funds from a deal to be considered for a share buyback.
“The proposed divestment of the Banksmeadow facility will maintain competition for B&D waste processing in Sydney’s Eastern Suburbs and inner city,” Mr Sims said.
The ACCC noted building and demolition waste processors will still have sufficient dry landfill alternatives to Bingo after the deal is completed, despite the company holding a significant share of the Sydney market.
The introduction of the Queensland landfill levy will likely lead to a boost in Sydney landfill prices this year regardless of the Bingo deal, according to the regulator, providing an incentive for more recycling and landfill capacity being made available in NSW.
Bingo shares halved last week following a profit downgrade due to weak growth in building waste.
The Sydney-based Tartak family, who built a small skip bin collection company into a waste management and environmental operator, have embarked on the chunky deal to help Bingo gain scale and compete against larger competitors including Suez, Veolia and the locally-listed Cleanaway.
Bingo proposes to fund the deal via a $425m entitlement offer at $2.54 a share with Dial A Dump to receive $378m in cash and $200m in Bingo shares.
Dial A Dump founder Ian Malouf will own a 12 per cent stake in the company as part of the deal along with a non-executive director’s role on Bingo’s board. Mr Malouf’s stake will be subject to escrow split in four equal tranches which can be cashed in nine, 12, 18 and 24 months after the deal completes.
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