EQT to Take Cleanaway Private in A$9.3 Billion Deal

Cleanaway Waste Management, Australia's largest waste-collection and resource-recovery company, agreed on Sunday to go private in a deal with Sweden's EQT worth roughly A$9.3 billion (about US$6.5 billion), the country's biggest take-private transaction of the year and the culmination of a bidding process that began in mid-August.

Under a binding Scheme Implementation Deed signed by both companies, a vehicle controlled by funds managed by EQT Infrastructure will pay Cleanaway shareholders A$3.095 a share in cash, less the value of any dividends the board declares before the deal closes. The offer carries no financing condition; EQT says its debt and equity financing is fully committed.

A 32 Percent Premium

The price represents a 32.1% premium to Cleanaway's last undisturbed closing price of A$2.37 on Aug. 12, the day before word of the approach leaked, and roughly a 34% premium to the stock's one-, three- and six-month volume-weighted average prices. It values the company at about 20 times its underlying earnings before interest and tax of A$470.2 million for the year through June. Cleanaway's board may still declare a special dividend of up to A$0.19 a share before completion, which would be deducted from the headline cash price.

Shares in Cleanaway, which trades on the Australian Securities Exchange, jumped sharply on the news, according to the Motley Fool Australia, though the exact size of the move was not independently confirmed against a real-time exchange print.

Nine Weeks of Due Diligence

EQT first revealed a non-binding, indicative offer of A$3.13 a share on Aug. 13, which Cleanaway's board said it intended to recommend pending due diligence and a binding agreement. What followed was roughly nine weeks of exclusivity, extended several times, most recently to 7 a.m. Monday in Melbourne. Cleanaway twice had to respond to exchange queries about unusual trading in its stock as speculation mounted; shares slid from A$2.63 on Oct. 15 to a low of A$2.43 the following day before Sunday's announcement.

EQT already owns several waste and environmental-services platforms abroad, including Urbaser, ReWorld, Encyclis and Arcwood, and is framing the Cleanaway purchase as an extension of that strategy into Australia. The Stockholm-based firm manages roughly €354 billion in assets globally across private capital, infrastructure, real estate and secondaries.

Cleanaway describes itself, in its own investor disclosures, as Australia's leading integrated waste provider, with more than 9,700 employees, over 350 sites and the country's largest waste-collection fleet of more than 6,200 vehicles across Australia, New Zealand and the Middle East. The company's AGM, where a previously scheduled change of board chair was already on the agenda, is set for Oct. 22 — a scheduling coincidence unconnected to the takeover news.

EQT's infrastructure arm has spent the past several years assembling an international portfolio of waste and environmental-services businesses, including ReWorld in the United States, Urbaser in Spain and Encyclis and Arcwood in the United Kingdom. Cleanaway, by headcount, would be the largest single addition to that portfolio to date, giving the firm a foothold in Australian municipal and industrial waste contracts that are typically written for decades at a time and provide steady, inflation-linked revenue regardless of the broader economic cycle — the kind of cash flow infrastructure investors like EQT generally prize.

A Shareholder Fight Already Brewing

Cleanaway's board, led by chair Samantha Hogg, unanimously recommended the deal to shareholders.

"The Board has carefully assessed EQT's proposal against the value of Cleanaway on a standalone basis, including the opportunities ahead of us under Blueprint 2030 2.0 and the investment and execution required to deliver them," Hogg said in the company's announcement. "Following a disciplined process and engagement with EQT, the Board is unanimous in its view that the Scheme delivers strong and certain cash value to shareholders, at a significant premium to Cleanaway's undisturbed share price."

EQT's side welcomed the deal in similar terms. "Cleanaway has built an exceptional national platform providing services to Australians every day," said Sam Franklin, managing director at EQT Infrastructure, in the firm's own release. "We see significant opportunity to build on these strong foundations by investing in the infrastructure needed to meet Australia's evolving waste management and resource recovery needs." EQT Infrastructure partner Tobias Küng added that the firm looks forward to "combining their deep local expertise with EQT's global experience in waste and environmental services and disciplined, long-term investment approach."

Not every investor is on board. Fund manager John Wylie of Tanarra Capital, reported to hold a stake of more than 4%, has reportedly sent Cleanaway's board a letter criticizing the deal process and aspects of its governance, according to Australian press coverage; Cleanaway has not publicly responded in detail, and the letter's full contents have not been independently verified. Industry superannuation fund Cbus, a roughly 6% shareholder, has also been reported to have reservations about the price. Both stakes add uncertainty to a shareholder vote that is still months away.

What Happens Next

Kroll Australia has been appointed as an independent expert to assess whether the scheme is in shareholders' best interests. Cleanaway expects to issue a scheme booklet by Dec. 14, with a shareholder vote likely by the end of February and completion targeted for the end of March 2027, subject to approval from the Federal Court of Australia, the Australian Competition and Consumer Commission, the Foreign Investment Review Board and, reflecting EQT's Gulf-state investor base, competition regulators in Kuwait and Saudi Arabia.

Cleanaway's roughly 9,700 employees would move under EQT's ownership if the deal completes, with EQT saying it intends to keep investing in the company's existing management team and its "Blueprint 2030 2.0" growth strategy. Cleanaway's advisers on the deal are Barrenjoey and Macquarie Capital, with Ashurst Perkins Coie as legal counsel; EQT is advised by J.P. Morgan and RBC Capital Markets, with Allens serving as its legal counsel. Shareholders have been told they need take no action for now.