August 21, 2018 / 5:39 AM / 8 months ago

UPDATE 2-Australia's Bingo buys domestic rival to gain from China waste import ban

* Bingo to pay A$577.5 mln in cash and shares

* Deal grows local capacity in face of China’s waste import ban

* Buys exposure to Sydney’s booming building waste market

* Funded by capital raising; shares halted (Recasts on Chinese ban, adds management and analyst quote)

By Tom Westbrook

SYDNEY, Aug 21 (Reuters) - Australian garbage handler Bingo Industries is buying smaller rival Dial A Dump Industries for A$577.5 million ($423 million) to build capacity to process kerbside trash, in a move aimed at cashing in on a Chinese ban on waste imports.

With the cash and shares deal, newly-listed Bingo will acquire a big dump in Sydney, lift its exposure to a booming building waste market in the city and benefit from ever rising quantities of refuse thanks to steady population growth.

It could also enable the company to grow its slice of a A$5 billion domestic recycling market dominated by global giants Suez SA and Veolia Environnement SA and which has been upended by China’s ban.

China, the world’s biggest importer of plastic waste, stopped accepting shipments of rubbish, such as plastic and paper in March, sending shockwaves through the world’s waste handling supply chain.

It hit some 1.25 million tonnes of Australian waste, worth an estimated A$850 million, prompting Australia’s government to promise investment in incinerators and boost recycling to deal with a looming backlog.

“The Chinese ban basically means we need to invest more in waste infrastructure assets ... to deal with the waste locally,” Bingo chief executive Daniel Tartak told Reuters by phone.

“We believe we’re playing our role there and this is the first step for us to be able to do that,” he said, adding the company plans to expand the Sydney tip from handling mainly building waste to take household and commercial recycling as well.

Ian Malouf, who founded Dial A Dump in 1984 and will take a 12 percent stake in Bingo and board seat under the deal, said Bingo’s management would make the most of his asset.

“The coming together of these businesses is something that was necessary to compete with the multinationals,” he said.

Dial A Dump’s building material recycling business was unscathed by the Chinese ban since it is domestically focused and is benefitting from a slew of huge infrastructure projects underway in Sydney.

“It’s a very smart move by Bingo. It gives them an enormous infrastructure base for construction and demolition recycling,” said industry analyst Mark Ritchie, Managing Director of Sydney-based MRA Consulting.

Sydney-based Bingo will fund the purchase, plus some property deals, via an A$425 million capital raising, and its shares were placed in a trading halt on Tuesday for the bookbuild. Dial A Dump is not listed. ($1 = 1.3669 Australian dollars) (Reporting by Tom Westbrook; Additional reporting by Aby Jose Koilparambil in Bengaluru; Editing by Stephen Coates and Muralikumar Anantharaman)

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