Melbourne, Australia - When Transpacific Industries Group Limited, one of Australia’s largest waste management companies, asked Arcadis to provide technical and environmental due diligence for a major acquisition it was a sign of their confidence in our team.
The work was initiated when Transpacific began negotiations to buy Boral Waste Service’s ‘Western Landfill’, a huge site receiving around 750,000 tonnes of material a year. Despite the potential to operate for another 60 years, Boral faced significant obstacles due to cash flow, site and environmental management and, most importantly, approvals for the landfill’s expansion.
For Transpacific, whose existing seven municipal landfill sites in Melbourne were nearing exhaustion, the addition of Western Landfill was a strategically and commercially important move in the aggressive waste management industry, allowing it to continue to service its high waste volumes at a competitive market price.
Arcadis supported Transpacific’s due diligence responsibilities during the Boral negotiations across the entire nine month acquisition timeline until the eventual $165 million purchase was agreed in December 2014. As part of its technical and environmental input, Arcadis also included a market assessment of key competitor sites to understand the asset’s market status, a study of potential alternative sites, and detailed advice related to planning approval after Boral’s submission to expand the site in 2014
Negotiating any major commercial transaction is always a sensitive and complex process that moves to its own irregular rhythms. For Arcadis this meant creating a consistent, flexible and multi-disciplinary team who could respond rapidly to a range of deadlines or “gateways”, as well as varied, often urgent, requests for technical information. The accuracy of risk quantification inputs – or “materiality” – was also crucial and Arcadis not only augmented its own extensive market knowledge with public data and site visits, but created a “due diligence timeline” outlining a set of actions and work practices for each stage of the negotiation and particularly the release of vendor due diligence reports.
One broad measure of the success of this project was the ultimate negotiation and purchase of the Boral Western Landfill by Transpacific of course, but other features also stand out. Arcadis’s in depth review of key issues allowed Transpacific to quantify the materiality of key risks, particularly those related to planning approval, leachate holding and treatment, landfill staging issues and the location of key site risks in order to negotiate a suitable purchase agreement.
Key to Arcadis’s overall success on the project was the depth and breadth of expertise at its disposal. Its environmental, planning and waste advisory experts were able to work as an embedded part of the clients mergers and acquisitions team, representing them at site inspections, negotiations with financiers, supporting the construction of financial models, modeling landfill availability and airspace – the ultimate means for valuing a landfill asset – and advising on planning and environmental approvals.
The Boral Western Landfill is a key Victorian asset, currently taking 30 percent of the state’s ‘putrescible’ waste, but predicted to reach 50 percent in the near future. Helping Transpacific, a company with decades of experience in running responsible waste management services and managing high-risk sites, take over this important landfill promises to not only deliver a more informed and planned approach here, but a better Victorian system overall.
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