17 July 2006
WRG Holdings agree sale of its Waste Disposal Business
Fomento de Construcciones y Contratas, S.A (FCC) and WRG Holdings today announce that they have agreed the sale by WRG Holdings of its waste disposal business (other than its waste-to-energy business) to FCC, one of Spain’s leading construction and service groups, for £1,400 million.
This sale follows the demerger in May 2006 of WRG Holdings’ activities into distinct waste disposal and renewable energy businesses. WRG Holdings retains ownership of the renewable energy business, which is the largest pure-play renewable power generation company in the UK.
Upon completion of its acquisition of the waste disposal business (WRG), FCC will become a leading player in the waste management sector in the UK, significantly enhancing its existing presence through its wholly owned subsidiary Focsa. In combination with its current presence in Spain, where FCC is the leader in the waste management sector, and the recent acquisition of ASA, a prominent waste management player in Austria and a number of key Eastern European markets, the acquisition of WRG will position FCC as one of the leading Pan-European waste management operators.
Guy Hands, Chief Executive of Terra Firma, said:
“In 2003, we identified Waste Recycling Group as an opportunity to participate in the development of the UK waste industry, which was undergoing radical change due to stricter regulation and the greater need to develop the infrastructure that will provide the future alternatives to landfill assets. Today, the business is transformed into a leader in its sector with a strategic and operational discipline. I am delighted that we have found new owners for the business who will invest further in its exciting prospects.”
Jim Meredith, Chief Executive of Waste Recycling Group, said:
“Since Terra Firma financed the purchase of WRG in August 2003, the business has been transformed to become one of the UK’s leading waste management and energy recovery companies. It handles approximately 13 million tonnes of household, commercial and industrial waste each year and operates facilities for the reception, recycling and disposal of waste throughout the UK, including a network of waste transfer and recycling centres and a regional network of operating landfill sites. It manages nearly 70 civic amenity sites on behalf of local authorities for use by the general public.
This has been achieved with the support of Terra Firma, who have worked with us to deliver a number of strategic and operational initiatives to meet our customers’ requirements. Under Terra Firma’s ownership, WRG has invested £450 million in developing waste treatment facilities for local authorities and trade customers, including the Allington incinerator in Kent, and made charitable donations of approximately £10 million on average per year under the landfill tax credit scheme, as part of our belief that we have a responsibility to the communities we serve. I am delighted that for the next stage in our development we will have the best possible strategic partners in FCC, with more than 100 years of experience and a leadership position in the Spanish waste management business, who have committed to maintain the existing employment rights of WRG’s staff.”
Rafael Montes, Chief Executive of FCC, said:
“We are delighted with the acquisition of WRG. In our new Strategic Plan approved by our Board in April 2005, and supported by FCC’s major shareholder, Esther Koplowitz, we identified the UK waste management sector as one of our key priorities for growth. We have been present in this market for more than 15 years through our subsidiary Focsa. Through the acquisition of WRG, and with the support of its outstanding management team, we will become one of the leading UK waste management operators. Our ambition is to become a European leader in the waste management sector. With the acquisition of WRG, added to our leading presence in Spain, Portugal, and Central and Eastern Europe, we believe we are achieving this goal.”
Merrill Lynch and Deutsche Bank acted as financial advisors to Terra Firma.
Morgan Stanley acted as financial advisors to FCC.
For further information:
Andrew Dowler Financial Dynamics +44 (0)20 7831 3113
Inigo Morenés FCC Investor Relations +34 91 359 3263
About Terra Firma, the European private equity group, bought Waste Recycling Group in July 2003 and the UK landfill assets of Shanks Group were added in June 2004