Biffa buys Barnsley-based Company Shop in £82.5m deal

(Sharecast News) - FTSE 250 waste management company Biffa said on Thursday that it has bought Barnsley-based Company Shop (CSG), a redistributor of surplus food and household products, in a £82.5m deal.
There is also a deferred consideration of up to £5m, based on trading performance from April to September 2021.

Biffa said CSG is the only commercial redistributor of scale in the UK, with unrivalled operational capabilities and infrastructure which underpin its strong growth plans.

Biffa said the acquisition leverages its position as the UK's leading sustainable waste management company, further improving its capability to support its customers' waste reduction and recycling targets.

The deal will be funded from existing committed debt facilities and is expected to be immediately earnings-enhancing on completion.

Chief executive Michael Topman said: "Biffa and Company Shop Group share a common set of goals, including the continued development of profitable, sustainable waste management solutions while making a meaningful contribution to society.

"We welcome all of Company Shop Group's members, partners and staff to Biffa and look forward to the next stage of the business' development."

Broker Peel Hunt said Biffa "has stepped out of its normal acquisition arena" with this deal.

"This comes as a complete surprise to us," it said. "Until now, Biffa has made acquisitions that are bolt-on, and which bring immediate cost synergies, typically paying more than 5x post synergy EBITDA, and bring no new business risk.

"Company Shop Group is a membership-based business, which sources surplus produce from 500 suppliers, re-labels/cleans/repackages them, and sells them at a discount, mainly through its 12 retail outlets to FMCG sector employees and key workers in healthcare and emergency.

"Whilst this deal enhances ESG credentials, it only enhances EPS if one measures it against cash, which ignores the fact that it was bought with the proceeds of a £100m equity raise last year. We do not expect investors to like it, but look to hear more in an investor call later. We will reconsider our target price and estimates then."