Cleanaway Waste Management’s $110m Citywide deal marks key step in Blueprint 2030 strategy
Melbourne-based Cleanaway Waste Management (ASX: CWY) will spend $110 million on the acquisition of local waste and recycling business Citywide Service Solutions.
The deal will see Cleanaway concurrently enter into a 35-year lease for a waste transfer station at Dynon Road owned by Citywide, the second largest of its kind in Victoria and a key supplier to the Melbourne Regional Landfill, which Cleanaway took ownership of in 2015.
Cleanaway has committed $35m to redeveloping and modernising the Dynon Road station into a larger and more efficient facility as part of the acquisition, with the city of Melbourne to also contribute $10m to the project over the first four years of Cleanaway’s ownership.
Melbourne expansion
Cleanaway chief executive officer Mark Schubert said the Citywide acquisition represented an “attractive opportunity” for the company to expand its solid waste services business across metropolitan Melbourne.
“Integrating Citywide into our network is expected to deliver valuable efficiencies and facilitate growth through the broadening of our municipal, commercial and industrial collections capabilities,” he said.
“The redevelopment of Dynon Road will almost double the facility’s current operating capacity, unlocking attractive earnings growth for shareholders and supporting future volume growth into our post-collections infrastructure assets.”
Citywide generated EBITDA of $10.7m and EBIT of $6.4m in the 12-month period ending February 2024.
Strategy alignment
Mr Schubert said the Citywide deal aligned with Cleanaway’s BluePrint 2030 growth strategy announced in mid-2022.
The strategy aims to create shareholder value by integrating and extending Cleanaway’s network of infrastructure assets to provide customers with “high circularity, low-carbon solutions, seamless customer service and value for money.”
“We expect to incur approximately $15m in additional overheads from financial year 2023 to support our blueprint for growth and to improve our capability,” Mr Schubert said at the time.