Waste management company Cleanaway Waste Management will buy industrial services company Contract Resources Group Pty Limited for an enterprise value (EV) of $377 million (US$238 million).
Cleanaway said it would buy the specialist provider of catalyst handling, decontamination, chemical cleaning and related services from two shareholders, including funds managed by SCF Partners Inc. and Viburnum Funds Pty Limited.
Cleanaway said the acquisition:
- would be made at an EV of 5.9 times forecast earnings before interest, tax, depreciation and amortisation (including synergies) for the 2025 financial year
- was expected to deliver about $12 million in annual net cost synergies when combined with IWS, repositioning it as a leading provider of technical services to oil and gas, resources and industrial customers and a platform for growth.
- was forecast to deliver high-single digit earnings per share accretion post pro forma synergies while remaining EPS accretive pre-synergies in the first 12 months and a double-digit internal rate of return pre and post synergies.
Managing Director and CEO Mark Schubert said Contract Resources was a natural fit with Cleanaway, given its market leadership, deep sector expertise, and stable recurring earnings stream.
He said Contract Resources’ long-standing relationships with tier one oil and gas customers and attractive growth outlook was strongly aligned with Cleanaway’s strategic vision for industrial services.
The acquisition would accelerate Cleanaway’s decommissioning, decontamination and remediation (DD&R) growth strategy.
“This enables Cleanaway to capture a larger share of the growing DD&R market, including the estimated $43 billion in offshore oil & gas decommissioning opportunities between 2025 and 2075,” Schubert said in a media release.
The integration with Cleanaway would reposition its Industrial Waste Services business, enhancing its scale, and unlocking opportunities, including cross-selling total waste management solutions into Contract Resources’ customer network.
At the time of writing shares in Cleanaway (ASX: CWY) had risen five cents (1.96%) to $2.60, capitalising the company at $585 billion, after ranging between $2.56 and $2.76.
Created in 1975 as business by Brambles (ASX: BXB), it was sold to private equity firms in 2006 and listed on the ASX in 2016.
