Shanks ends buyout discussions with Carlyle

The UK-based waste management company said a ‘final price indication’ of 120 pence per share, or 15 pence less than Carlyle’s preliminary price indication last year, was too low. Carlyle was seeking to buy the company using capital from its €5.4 billion Carlyle Europe Partners III buyout fund.

London-listed waste management company Shanks Group has ended its discussions with The Carlyle Group over a possible buyout offer, according to a statement.

Shanks: feeling
undervalued by Carlyle

Shanks said that at a meeting Monday Carlyle made a final price indication of 120 pence (€1.32; $1.80) per share in cash for all the equity of Shanks, an offer which the Board of Shanks was “unwilling to recommend at such a level” to its shareholders.

“The Board’s response to the approach from Carlyle has always been about price,” Adrian Auer, chairman of Shanks, said in a statement. “Carlyle has failed to offer a price which (in the view of the Board) properly reflects the value of the Group.”

Originally, Carlyle, which was seeking to buy Shanks using capital from its €5.4 billion Carlyle Europe Partners III fund, made a preliminary indication that it would be willing to do a deal at 135 pence per share in cash. No actual buyout offer was ever made, but Carlyle’s initial price indication valued Shanks at around £536 million.

It is unclear why Carlyle lowered its price indication between its initial approach last year and this week’s final indication.

Shanks is a UK-based provider of recycling, organic processing and private finance initiative waste management services. It is active in the UK, Belgium, Netherlands and Canada.

Shanks shares traded yesterday up more than 4 percent on the news, closing on 102 pence per share. Today the company’s shares were at 108 pence per share at press time.