PRESS RELEASE: Blackpeak advises – Acquisition of Toxfree Solutions and approximately $590 million equity raising
- Cleanaway has entered into a Scheme Implementation Deed to acquire 100% of the shares on issue in Toxfree for $3.425 per share in cash (“Acquisition Price”), representing an equity value of $671 million and an enterprise value of $831 million1 (“Acquisition”)
- Strategically compelling acquisition that strengthens Cleanaway’s existing operating segments, further improves operating leverage and delivers Cleanaway a leading position in the attractive medical waste segment
- Integration of the Toxfree business is expected to deliver approximately $35 million in annual synergies, realised over a 2 year integration period with total synergy benefits fully reflected in FY21
- The Acquisition Price is compelling for Toxfree shareholders and represents:
- A 27.5% premium to Toxfree’s 10-day VWAP, a 28.0% premium to Toxfree’s 1 month VWAP and a 34.7%premium to Toxfree’s VWAP since the FY17 result announcement2
- A 29.4% premium to Toxfree’s 10-day VWAP, a 29.8% premium to Toxfree’s 1 month VWAP and a 36.6%premium to Toxfree’s VWAP since the FY17 result announcement,2 inclusive of the interim dividend payable by Toxfree of up to 5 centsper Toxfree share
- An acquisition multiple of 10.0x FY17 EBITDA on a pre-synergies basis or 7.1x pro forma FY17 EBITDA (post realisation of anticipated annual synergies)3
- Given the anticipated timing of completion, Cleanaway will allow Toxfree to pay an interim dividend of up to 5 cents per Toxfree share during March 2018 without a reduction in the Acquisition Price
- Cleanaway will also permit Toxfree to pay a special dividend to Toxfree shareholders4 with a corresponding reduction in the Acquisition Price for the cash amount of any special dividend
- Delivers attractive financial metrics (pro forma for realisation of anticipated annual synergies):
- More than 25% accretive to FY17 EPS before amortisation of acquired intangibles (and EPS accretive pre-synergies)5
- More than 80% accretive to Free Cash Flow per share6
- Approximately 10% Pre-tax Return on Invested Capital on the Acquisition7
- Acquisition funded via:
- a fully underwritten $590 million 1 for 3.65 pro rata accelerated non-renounceable entitlement offer (“Offer” or “Equity Raising”); and
- debt drawn from a new multi-tranche facility
- Implied diluted equity value of $671 million based on an Acquisition Price of $3.425 per share and including value for performance rights and share appreciation rights outstanding, net of treasury shares. Enterprise value includes Toxfree net debt of $157 million and minorities of $3 million as at 30 June 2017.
- 10-day VWAP of $2.69 from 27 November to 8 December 2017. 1 month VWAP of $2.68 from 9 November to 8 December 2017. VWAP since the FY17 result announcement of $2.54 from 30 August to 8 December 2017.
- Based on Toxfree’s underlying FY17 EBITDA of $82.8 million and $35.0 million of anticipated synergies.
- The extent to which any franking credits attached to the special dividend or the interim dividend deliver value to Toxfree shareholders will depend upon their individual circumstances and those shareholders should seek legal and taxation advice with regards to how the receipt of franking credits (if any) may impact upon their individual taxation circumstances.
- Based on NPAT excluding transaction costs, one-off integration costs and amortisation of acquired identifiable intangibles. The impact of purchase price accounting has not been completed, which will impact future depreciation and amortisation charges. In accordance with AASB 133, Cleanaway standalone EPS has been restated based on an adjustment factor to take into account the bonus element of the Offer.
- Free Cash Flow per share defined as operating cash flow excluding interest, tax and one-off transaction and integration costs less capital expenditure, divided by the number of shares on issue. Cleanaway standalone free cash flow per share has been restated based on an adjustment factor to take into account the bonus element of the Offer.
- Defined as EBIT excluding one-off transaction and integration costs before amortisation of acquired identifiable intangibles divided by the total consideration.
