Cleanaway Shares Soar 20% After EQT Signs Binding Takeover Deal for Australia's Biggest Waste Management Firm

SYDNEY — Shares of Cleanaway Waste Management surged more than 20% on Monday after the company signed a binding agreement to be acquired by private equity firm EQT Infrastructure, ending weeks of uncertainty over Australia's largest waste management takeover.

Cleanaway shares closed up 50 Australian cents, or 20.24%, at 2.97 dollars, near the session high of 2.99 dollars. Trading volume was exceptionally heavy, with more than 210 million shares changing hands, more than four times the volume of Friday's session. The company's market value rose to about 6.7 billion dollars.

The rally reversed Friday's 6% slide, when investors grew anxious that the deal might fall apart ahead of Monday's deadline.

Binding agreement signed

Cleanaway said Monday it had entered into a scheme implementation deed with Sedum Group, an entity owned by funds managed or advised by EQT, under which the buyer will acquire all of Cleanaway's shares through a scheme of arrangement.

Shareholders will receive 3.095 dollars in cash per share. The figure reflects EQT's original indicative offer of 3.13 dollars, reduced for Cleanaway's final dividend of 3.5 cents per share paid on Oct. 8.

The agreement allows Cleanaway to pay one or more dividends totaling up to 19 cents per share before the deal is completed, which may include a fully franked special dividend. Any such dividends would be deducted from the cash consideration.

A ticking fee of 0.02 cents per share per day will apply from June 1, 2027, if the deal is implemented after May 31, 2027, providing an incentive for timely completion.

Timeline

Cleanaway expects to hold a scheme meeting for shareholders before the end of February 2027, with the deal expected to be implemented by the end of March 2027.

The transaction remains subject to conditions, including regulatory approvals, an independent expert's report and approval by shareholders. Cleanaway's board had previously said it intended to support a binding proposal at the indicated price, in the absence of a superior offer and subject to the independent expert's opinion.

Weeks of negotiation

EQT first approached Cleanaway in early August with a confidential, non-binding proposal. The companies signed a transaction process deed in mid-August, granting EQT exclusive due diligence.

The exclusivity period was extended while the parties negotiated the binding deed, with the final deadline set at 7 a.m. on Monday. EQT had repeatedly confirmed its intention to proceed, including a written reconfirmation last week that nothing had emerged from due diligence likely to prevent the deal.

Debate over value

Despite Monday's jump, Cleanaway shares still trade slightly below the 3.095-dollar cash offer, reflecting the time remaining before completion and the risk associated with regulatory approvals.

Some commentators have questioned whether the price fully values the company. Commentator Robert Gottliebsen argued in The Australian that the underlying value of Cleanaway's core operations could be closer to 4 dollars a share based on valuations of U.S. waste infrastructure companies.

Difficult years for shareholders

The takeover comes after about five years of broadly sideways share price performance, as rising labor and fuel costs weighed on earnings. Earlier this year, Cleanaway cut its earnings guidance by 20 million dollars, citing higher fuel costs linked to disruptions in the Middle East.

Cleanaway shares are up about 7.6% over the past year.

What's next

Shareholders will receive a scheme booklet with the independent expert's report ahead of the vote early next year. Investors will also watch for details of any special dividend before completion.