Waste management company Shanks has confirmed that it is considering the purchase of the Van Gansewinkel Groep BV, one of the largest waste collection and recycling businesses operating in the Netherlands and Belgium.

Van Gansewinkel has a workforce of 4,125 and reported a turnover of €946 million (£717 million) in 2015. It operates a range of recycling services including paper, cardboard, wood, plastics, metals and food waste, and last year invested in new sorting lines in both Amsterdam and Belgium.

Though it says that there can be ‘no certainty’ that any transaction will occur, a statement released by the Shanks Group’s board says that the company, which itself has waste operations in Holland and Belgium, will shortly be submitting an ‘indicative non-binding proposal’ to the Van Gansewinkel board.

The confirmation from Shanks follows reports earlier this week that Van Gansewinkel was being sold by its consortium of creditors and that Germany’s Remondis, Suez Environnement Company SA and Shanks were among those participating in an auction.

Potential to ‘transform’ market position

The Shanks statement states that a key part of Shanks’s strategy is to manage the group’s portfolio to accelerate growth through the acquisition of value-enhancing businesses and that the Shanks board believes the structure and conditions in the Benelux solid waste market has the potential to ‘transform and enhance’ the company’s position in the region.

It believes that ‘the combination of the two businesses would create a leading player, with complementary strengths across all market sectors’. Shanks CEO Peter Dilnot said: “We’re very clear on what is the strategic value of this deal and what we will be able to build and create in terms of the market and our position.”

The Financial Conduct Authority (FCA) has deemed the possible acquisition as a reverse takeover, meaning that it is not subject to a public disclosure regime, and Shanks has requested a temporary suspension of its shares. The statement explains: ‘Given the strategic and commercial rationale for a combination of the businesses and potential synergies, the board believes that it is in the best interests of shareholders to investigate the possible acquisition of Van Gansewinkel despite the resultant temporary suspension of the company’s shares.’

In February Shanks released a trading update that suggested that weakening commodities in the municipal waste market would lead to a financial year performance ‘slightly below’ its previous expectations. This came alongside the sale of 49.99 per cent of its equity in the financing and infrastructure special purpose vehicle (SPV) in its £750-million private finance initiative (PFI) contract with Wakefield Council.

As a consequence of the sale, Shanks deconsolidated its investment, resulting in £88 million of associated non-recourse debt being removed from the group’s balance sheet and simplifying the presentation of the group’s consolidated accounts.

The Shanks board says that it ‘will remain disciplined on value’ and will only pursue the acquisition of Van Gansewinkel if it delivers attractive returns for shareholders.

If a transaction were to proceed, it says, Shanks would intend to finance the acquisition through a combination of new debt facilities, equity consideration to the vendors and an equity fund raising.