Waste management firm Renewi said it had been given the green light by regulators to sell its UK Municipal business to Biffa.
In a statement to markets, Renewi said it had obtained approval from the Competition and Markets Authority (CMA) for the £125m deal, which was announced in May and is expected to increase the group’s free cash flow by €15m to €20m per annum.
It came as first quarter revenue grew three per cent year-on-year to €434.4m, while underlying earnings before interest and taxation (EBIT) also rose 3 per cent to €22.3m,
Chief executive Otto de Bont said: “We continue to deliver on our strategic objectives of portfolio optimisation strengthening our platform and accelerating organic growth.
“Throughout the quarter we continued to see the benefits of our Simplify programme, which is helping to continually drive improved performance and efficiency. Looking ahead, our.. outlook is unchanged, reflecting our strong foundation and our strategic progress.”
Looking ahead, Renewi said market conditions remained “mixed,” particularly in the commercial waste division.
The firm’s deal with Biffa marked a bid to exit the UK market, which it has previously described as “unpredictable,” and to cut costs.
Its British arm has dragged on the bottom line in recent years and was a large part of the reason Renewi slipped into the red in its most recent full-year results. The company announced a strategic review into its UK operations late last year.
“As previously guided, leverage is expected to increase in the short term, to approximately 2.9x upon completion of the sale of UK Municipal, before reducing as the benefits of materially stronger cash generation are delivered,” Renewi told shareholders on Tuesday. It remains committed to a medium-term target of five per cent annual revenue growth.