Renewi rejects £636mn buyout offer from Macquarie

Macquarie Asset Management has revealed it made a bid for recycling specialist Renewi (RWI) at the start of this week. The 775p per share offer, which was rejected by the board, constitutes a 52-per-cent premium to the group’s closing price of 509p yesterday. 

In a statement, the asset manager said it “believes that Renewi's ability to deliver its stated ambition will remain constrained under the current capital structure”. The company operates primarily in the Netherlands and Belgium, though it also has a handful of local government waste contracts in the UK. Investors were enthused by the opening salvo to a potential buyout process, with shares climbing 40 per cent.

Macquarie encouraged Renewi's board to engage with its buyout attempt so a recommended bid could be put to shareholders. Renewi argued that the offer "fundamentally undervalues" the business. "The board of Renewi strongly urges shareholders to take no action at this time," it said in a statement.

The company has no single major shareholder that could swing the deal a certain way. US firm Coast Capital Management upped its stake from 6 per cent to 8.5 per cent this week, to become the single largest shareholder. 

Renewi is striving to become a leader in “waste-to-product” recycling processes. In recent quarters, the business has been hit hard by rising inflation and slowdowns in some of its key sectors. Limited activity in the Dutch construction industry, for instance, left it with fewer waste streams available for collection and treatment. The company has developed a significant position in Belgium's highly regulated recycling sector. 

Macquarie said it was supportive of Renewi’s circular economy goals, but said “this strategy is not without risk and requires additional capital to implement”. The investor already owns plenty of recycling infrastructure, including in the UK, Europe and the US.