Cleanaway Waste Management acquisition announcement

Cleanaway Waste Management Limited (ASX: $CWY) has announced the acquisition of the waste and recycling business and assets of Citywide Waste, a move that expands its collections business and Solid Waste Services infrastructure network in Melbourne. The acquisition includes the Dynon Road waste transfer station, a key supplier into Cleanaway's Melbourne Regional Landfill, and aligns with the company's Blueprint 2030 strategy.

Executive commentary on the acquisition

This transaction represents an attractive opportunity to expand our Solid Waste Services business in metropolitan Melbourne. Integrating Citywide Waste into our network is expected to deliver valuable efficiencies, while facilitating growth through the broadening of our municipal and C&I collections capabilities. The re-development of Dynon Road will almost double its current operating capacity, unlocking attractive earnings growth for shareholders. It will also support future volume growth into our post collections infrastructure assets. Securing this site in inner-city Melbourne provides a strategic position in the densely populated Melbourne metropolitan area and aligns with our approach of using M&A to accelerate the delivery of our BluePrint 2030 strategy. We are confident that the acquisition of this unique asset will deliver attractive returns to shareholders over the life of the lease.

Summary of Cleanaway Waste Management's acquisition of Citywide Waste

Cleanaway Waste Management Limited (ASX: $CWY) has agreed to acquire the waste and recycling business and assets of Citywide Waste, including the Dynon Road waste transfer station, for a total consideration of $110 million. The acquisition is expected to accelerate the company's Blueprint 2030 strategy by adding a strategically located infrastructure asset that extends its network. The redevelopment of the Dynon Road waste transfer station into a larger, efficient, modern post collections facility is projected to cost approximately $35 million, with an additional $10 million contribution from the City of Melbourne over the first four years of Cleanaway's ownership. Citywide Waste generated EBITDA of $10.7 million and EBIT of $6.4 million in the twelve-month period ending February 2024. While the acquisition is not expected to make a significant EBIT contribution in FY25, the earnings contribution on an integrated basis, including the post collections value of the volumes collected, is significant and expected to grow with the benefit of the additional capacity post redevelopment. The transaction will be fully debt funded and is subject to a range of conditions precedent including ACCC regulatory approval.