Suez is expanding its business in the UK with the acquisition of Devon Contract Waste (DCW), which specialises in commercial waste collections. According to the French environmental services company, the transaction is a sign of its confidence in the UK market as well as "a key step to meeting its international growth targets". The British market was one of the largest waste markets in Europe, and as such a strategic growth area for Suez, the company said.
DCW is a family-owned regional recycling and waste management operator. The business has a fleet of 37 trucks operating out of three depots, and a transfer and sorting operation in Exeter, according to Suez. With a commercial customer base located across Devon, Cornwall and Somerset, DCW would expand Suez's offer in England's southwest with recycling solutions for food waste, glass, and waste electrical and electronic equipment (WEEE) and confidential data destruction services.
DCW reports that it handles in excess of 25,000 tonnes per year of dry waste. In 2021, the most recent year for which annual financial filings are available from Companies House, Devon Contract Waste Ltd generated a net profit of £1.8m on turnover of £15.1m. However, these figures include the operations of DCW Polymers, a recycling and plastic furniture manufacturing business which is not included in the sale to Suez and will continue to be run by the Almond family. DWC itself expanded through acquisitions in 2021, purchasing the Somerset-based company South West Computer Recycling, which traded as WEEE Disposal before entering liquidation, and Exeter-based Collectrical which had also faced economic challenges.
Simon Almond, managing director for DCW, said that he was "excited to focus on the DCW Polymers business, replicating our success by growing our specialist plastic recycling services and expanding our range of recycled plastic products".
First "green bond" denominated in pounds sterling
"With the purchase of DCW, the group is proud to reinforce its footprint in [the UK], which forms a key part of Suez's international growth ambitions, with a target to reach 40 per cent turnover from international markets by 2027," said Suez, announcing the acquisition. On a restated basis, including twelve-month contributions from the South African company EnviroServ and its UK Recycling and Recovery (R&R) business bought back from Veolia, Suez generated 27 per cent of its 2022 revenue outside of its home market.
Commenting on the deal on Twitter on Monday, Suez CEO Sabrina Soussan highlighted the progress that Suez was making on the UK market. She noted that Suez's UK growth plans implied "natural needs for sterling-denominated debt" given its long-term cash flows in pounds generated from UK operations. She also referred to Suez's recently issued pound-denominated green bond. Some £600m in annual fixed rate notes with a twenty-year maturity had been issued. The capital would enable Suez to refinance part of the €1.2bn acquisition facility used to repurchase Suez's recycling and recovery operations in the UK, to diversify the group's investor base and to increase the average debt maturity by two years to 8.5 years. This was Suez's third green bond issuance and the first in sterling, according to Ms Soussan.