The UK's third largest landfill operator
Shanks was the third largest landfill operator in the UK, handling over 5m tonnes of waste per annum. Its assets were acquired by Terra Firma and merged with WRG, its landfill business, as part of its consolidation strategy.
Asset-Backed: Shanks owned 80m cubic metres of space with planning consent for use as landfill, and owned and operated 15 active and 9 closed landfill sites.
Requiring Fundamental Change: There were significant synergies to be achieved from combining the Shanks’ landfill assets with those of WRG. Its sites were substantially larger than WRG’s, adding critical mass to the WRG platform. There was also greater potential in Shanks for exploiting biogas – an activity which Terra Firma had identified as a profitable growth business.
- Shank’s UK landfill assets were merged into WRG’s, resulting in a business with around 30% of the UK waste disposal market.
- WRG’s business strategy was refocused to optimise landfill void through higher prices and less volume. Capital expenditure was enhanced and procurement management improved.
- The combined biogas operations were demerged into a standalone business and renamed Infinis. Infinis is now the UK’s largest independent renewable energy generator, with biogas, wind and hydro portfolios.
- WRG’s organisational and management structure was rationalised.
- Within Infinis, the management team was strengthened with a new CEO, CFO, Commercial Director and Head of Wind, as well as a Head of Development to accelerate the investment programme.
Developing through capital expenditure
- WRG’s platform gave it the opportunity to engage in large capital projects which could diversify the business and create value. WRG’s existing sites also provided options for new facilities as it was easier to obtain planning permission on land already used for waste management than for greenfield sites.
- WRG developed alternative waste disposal options through Allington – a €225m, 500,000 tonne per annum incinerator in Kent – and the refurbishment of its existing 150,000 tonne Eastcroft facility, giving it 25% of the UK’s incinerator capacity.
Building through mergers and acquisitions
Lowering the cost of capital to create extra upside
- In December 2004, WRG completed the largest ever sterling high yield debt issue at that time, returning significant funds to shareholders.
Status of Investment: The WRG investment has been realised. In September 2006, Terra Firma sold the waste disposal business of WRG to a Spanish construction company. The sale comprised all WRG’s activities, other than the biogas business which had been de-merged into an independent company, Infinis, which Terra Firma sold in two transactions in 2016 and 2017.