News release

Deal activity in waste sector reaches a record high

New research from leading business and financial adviser Grant Thornton UK LLP has found that 2017 was a record year for M&A activity in the waste sector, with the highest number of deals recorded since 2010.

The report, Annual waste and resource management review, found that deal activity in the sector in 2017 reached a record high with 50 transactions. The year started strongly with 10 deals in both the first and second quarter. The last quarter was particularly active with 21 deals completed, the highest quarterly level since 2010.

The recycling and waste management sectors recorded the highest level of investment this year, making up 42% and 26% of deals respectively. The volume of recycling deals (21) increased by 50% compared with 2016, representing the largest rise in the sector.

Paper and metal recycling firms contributed most to this activity, making up 26% of recycling deals. Notable deals included Macfarlane Group’s acquisition of Nottingham Recycling Ltd and corrugated packaging manufacturer Greenwood Stock Boxes for £16.75 million.

2017 also saw a rise in appetite from overseas investors in acquiring UK businesses in the sector. 9 of the 50 deals seen in 2017 involved overseas acquirers.

The report found that while private equity investors were involved in the largest deals in 2017, they only contributed to 10% of overall activity. Apax Partner’s’ acquisition of international hazardous waste company Safety-Kleen Europe was the largest deal in 2017, at £640 million.

Mike Read, head of energy and environment at Grant Thornton UK LLP, commented: "The waste sector is a major driving force in the UK economy. In the last twelve months we have seen the sector’s M&A activity significantly increase and record the highest number of transactions since we first started our analysis in 2010.

“While deal activity remained relatively stable in most waste sub-sectors in 2017, recycling saw a stark increase. The impact of David Attenborough’s ‘Blue Planet’ means that waste, and how we deal with it, is now firmly on the national agenda. This has created more pressure than ever on the UK government to rethink its approach to waste and recycling. As a result we have seen a number of initiatives introduced, such as the ‘Latte Levy’, and with the rumoured ban on plastic straws and wet wipes it’s clear that interest in recycling is set to continue into 2018.

“The ongoing uncertainty surrounding Brexit is creating a challenging environment for the waste management sector and, while deal levels have increased, it has also resulted in a drop in confidence for some. The number of different potential outcomes from the negotiations also means that many companies have felt unable to look forward and confidently commit to making strategic plans.

“However frustrating this current climate may be, it’s imperative that the waste sector starts to plan for the future. So far, most firms in the sector have been reluctant to address this, but this needs to change. Companies need to be properly prepared in case of a challenging Brexit outcome and they need to start planning ahead now.”

Download the Annual waste and resource management review for our retrospective analysis of activity in the waste sector and a look forward to the key trends that will drive the sector for the next 12 months.