Support Services sector mergers and acquisitions comment – September 2008

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Welcome to the latest edition of the Support Services Newsletter. In September the team visited the Recycling & Waste Management Exhibition at the NEC in Birmingham, the UK’s leading trade event for the Recycling & Waste Management industry.

This year the event attracted a record number of visitors and exhibitors from all over the world with some of the biggest names in the industry alongside smaller niche businesses who are all trying hard to become vital in managing and reducing our waste.

The place was buzzing with an array of innovative and creative waste management and recycling companies, robot-like sorting machines and even artists displaying their sculptures created from waste products.

So just how does the global downturn affect the waste & recycling industry? There is no doubt that competition is fierce, but with the continued pressure from the Government to reduce, recycle and re-use waste, the sector continues to see healthy levels of growth and business for most remains strong. M&A Activity has been buoyant in recent years and having spoken with many of the large corporates, it would appear that appetite for niche recycling opportunities remains high on the agenda.

Even the infamous “Dragons” on Dragons Den got in on the act recently by investing in a waste company. Paul Tinton, Managing Director at Prowaste Management Services received £200,000 for a minority stake in his construction waste separation businesses.

Whilst for some it can be difficult to get excited about waste, the team left the exhibition feeling truly inspired and one thing’s for sure, the market is clearly still going from strength to strength.

Deals completed in the UK

Intertek acquires HP White. Intertek, a global provider of quality safety services has acquired Maryland-based HP White, a provider of ballistic resistance testing and certification programmes for personal protective equipment (PPE). Initial cash consideration was £20m with a deferred consideration payment of £3.2m payable in October 2009, depending on financial performance of the company.

Hanson Resource Management acquired by Tube City IMS. Scunthorpe based Hanson Resource Management, a provider of specialist support services to the steel industry, has been acquired by Tube City, a US service provider to steel mills and foundries. The acquisition provides Tube City with additional markets in the UK and throughout the EU. Deal value was not disclosed.

Centrica acquires Solar Technologies for £2.8m. Solar Technologies, a British gas contractor involved in the installation of solar panels, has been acquired by Centrica. The acquisition will enable British Gas to install solar photovoltaic (PV) technology in the UK and will build on its aim of becoming the leading provider of low carbon energy services.

Centrica acquires Caythorpe Gas Storage. British Gas owner Centrica has acquired Caythorpe Gas Storage from Warwick Energy for £70m. Caythorpe owns the onshore Caythorpe gas production field near Bridlington in East Yorkshire, a substantially depleted onshore gas field near to the national transmission system. Caythorpe has already secured planning permission to convert the field to an onshore gas storage facility with capacity of up to 7.5bn cubic feet of gas.

Employment Services acquires Pertemps People Development. Network Group Holdings plc has disposed of Birmingham based Pertemps People Development Group, (PPDG) – a private sector provider of government solutions for the longer-term unemployed – to Employment Services of Australia (ESH) for a consideration of £22.6m. PPDG was established in 1998 by Pertemps chairman Tim Watts and Colin Birchall.

Connaught plc acquires MSF and Lowe Group. Connaught, the UK listed property services business, has acquired two compliance businesses – MSF (a fire compliance business providing extinguisher and alarm servicing across the South East) and Lowe (a Rotherham-based electrical compliance business). Combined deal value was £14m. The acquisitions are in line with Connaught’s strategy of building an integrated compliance services business.