Merger and acquisition activity in the South West’s waste and recycling industry increased last year as it remained one of the region’s few growth sectors, latest figures compiled by accountants and business advisers Grant Thornton reveal.
The firm’s 2011 Annual Waste Sector Review shows market continued to develop despite waste volumes falling by nearly 15% over the year.
Deal volumes during 2001 matched or surpassed every quarter of the previous year with the most significant increase in acquisitions of paper recycling companies (seven deals in 2011, one in 2010) and WEEE recycling (waste electrical and electronic equipment) companies (five deals in 2011, two in 2010).
Grant Thornton Bristol office principal consultant Nigel Mattravers – who is also the firm’s waste and renewable energy expert – said, based on the latest statistics, this trend looks set to continue throughout this year.
He said: “We continue to see the waste and environmental space performing as a key growth sector as the legislative agenda continues to push development and growth.”
“That said, investment is becoming harder for businesses in the sector to secure, as availability of capital is limited and uncertainty over funding remains.”
He said the surge in the number of deals was in part driven by an increasing level of acquisitions made by overseas parties (11 deals in 2011) and eight deals done during 2010. This is particularly significant as the deals took place while the sector experienced a marked drop in waste volumes, largely driven by legislative changes as well as the economic slowdown.
“Our analysis found that landfill operators are under increasing pressure to add value to waste streams in order to generate returns and retain contracts,” he added.
“In addition, within sub-sectors such as wood waste, advancing technology is diversifying the customer base and as a result, securing long-term supplies of consistent quality waste material is becoming a key priority for businesses.”
