So the price did not survive the test and went under the line in the sand. (it was quick sand - last Friday the price hit a low of $1.715) but it’s aiming to wriggle back to more stable technical ground with news Bingo is prepared to put it’s South Sydney processing facility out for collection with a view to greater treasure down the track.
Bingo dumps Sydney facility to ease Dial-a-dump takeover
Dial a Dump is in the sights of rival Bingo.
Waste management operator Bingo Industries has offered to sell its south Sydney processing facility to ease concerns raised by the competition regulator over its $577 million takeover of rival player Dial A Dump Industries.
In November, the Australian Competition & Consumer Commission flagged issues with the deal and the impact it would have on competition in waste processing, landfill and collections in eastern and inner city Sydney.
While Bingo repeated its view the acquisition would not substantially lessen competition in any relevant market, it’s prepared to offload the Banksmeadow operation in a bid to win regulatory clearances with any funds from a deal to be considered for a share buyback.
READ“The Dial A Dump acquisition is transformational for Bingo and we remain committed to working with the ACCC to reach a suitable outcome,” Bingo chief executive Daniel Tartak said. “We believe that this acquisition is inherently pro-competitive as it enables us to more readily compete against the larger national and international players in the industry.”
While Bingo stock climbed 6 per cent in early afternoon trading to $1.95 - giving the company a market capitalisation of $1.15 billion - its shares have shed 38 per cent since the deal was first revealed in August 2018.
The Sydney-based Tartak family, which built a small skip bin collection company into a waste management and environmental operator, have embarked on the chunky deal to help Bingo gain scale and compete against larger competitors including Suez, Veolia and the locally-listed Cleanaway.
Bingo’s rivals have been asked to submit to the ACCC by January 30 comments on whether the Banksmeadow divestment will address competition concerns with a final decision by the regulator due February 21.
The ACCC said the decision to consult on the divestment was not an indication it will accept the undertaking or clear the transaction.
“Consultation is just one step of the merger review process. The ACCC will continue to consider the proposed acquisition and its potential impact on customers and the market,” ACCC acting chair Roger Featherston said.
Bingo proposes to fund the deal via a $425m entitlement offer at $2.54 a share with Dial A Dump to receive $378m in cash and $200m in Bingo shares.
Dial A Dump founder Ian Malouf will own a 12 per cent stake in the company as part of the deal along with a non-executive director’s role on Bingo’s board. Mr Malouf’s stake will be subject to escrow split in four equal tranches which can be cashed in nine, 12, 18 and 24 months after the deal completes.
The acquisition includes the Eastern Creek plant, the biggest landfill and waste recycling plant in the southern hemisphere, with capacity of up to 2 million tonnes a year and 15 years of landfill life remaining at the site.
PERRY WILLIAMS
SENIOR BUSINESS WRITER
Perry Williams joined The Australian in 2018. Previously he was Asia energy reporter for Bloomberg News and prior to that held senior
