(Reuters) - Britain’s Shanks Group Plc is considering a bid for Van Gansewinkel Groep BV, Benelux’s largest waste management company, for an undisclosed sum, the companies said.
Shanks said on Tuesday it would submit an indicative non-binding proposal to Van Gansewinkel’s board after due diligence. If it decided to put in a bid, it would make an announcement in about three weeks, it added.
“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,” Shanks CEO Peter Dilnot said.
This follows a Mergermarket report on Monday that Van Gansewinkel was being sold by its consortium of creditors and those participating in the auction included Germany’s Remondis, Suez Environnement Company SA and Shanks.
A combination of Van Gansewinkel with Shanks or Suez Environnement would bring together two of the three largest players in the Dutch recycling market, a consolidation analysts say is needed to reduce over capacity.
Dutch recyclers have struggled due to European laws on reducing waste volumes in the Netherlands and a long-running slump in the domestic construction market.
Van Gansewinkel’s sales fell 2 percent to 945 million euros (720 million pounds) in 2015, while core earnings (EBITDA), before exceptional items, fell 18 percent to 82 million euros, its annual report said.
The company was created by the merger of AVR and Van Gansewinkel by private equity firms CVC and KKR in February 2007. The 2.2 billion euro deal left it saddled with significant debt.
Van Gansewinkel spokesman Jurriaan Spoel said the company was attracting interest now, after a refinancing last year that had led to a “big reduction” in its debt.
“Our improved figures have attracted interest and Shanks has said it will submit a formal offer,” he told Reuters.
Mergermarket said KKR and CVC turned Van Gansewinkel over to its creditors in a debt for equity swap around mid-2015.
The company’s consolidated net debt stood at 230 million euros as of Dec. 31, down from 702 million euros in 2014.
Shanks’ Dilnot said the British company was one of “a number of parties” that he believed had been approached.
Shanks, which has a market value of about 320 million pounds, said any deal would be considered a reserve takeover under UK law. Its shares were suspended from trading pending a further announcement.
Remondis spokesman Michael Schneider declined to comment. Suez Environnement did not immediately return a request seeking comment.
Reporting by Esha Vaish in Bengaluru and Anthony Deutsch in Amsterdam; Additional reporting by Toby Sterling; Editing by Sunil Nair and David Evans