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Kohlberg Kravis Roberts, the US buyout firm, has sold its Australian waste management business to the nation’s biggest waste collector, less than 11 months after it outbid the company for the asset.
Transpacific Industries said Wednesday that it had agreed to buy BIS Cleanaway from KKR for A$1.25bn.
In a keenly fought tussle, Transpacific was outbid by KKR when Brambles, the logistics operator, sold its Australian waste management and logistics business for A$1.8bn in June 2006.
The transaction was KKR’s first in Australia and was the country’s largest private equity deal at the time.
KKR – which is part of consortium bidding for Coles Group, the Australian retailer – said it wanted to focus on growth opportunities for the logistics unit it had acquired as part of Brambles deal. But its decision had also been influenced by Transpacific’s offer price.
“While Cleanaway was performing very well and on plan, a responsible owner has to consider all offers put to them,“ Joseph Bae, KKR Asia managing partner, said. “In this case the valuation placed on the business recognised its strong performance.”
While KKR declined to comment on how much it paid for the Cleanaway component, it is believed to have made a A$250m profit on the sale to Transpacific.
The 11-month deal flip – one of the fastest local asset exits of such magnitude in Australia – could also indicate that waste management was not as attractive a business as KKR may have initially thought and would be better handled by an experienced waste management operator such as Transpacific.
“The Cleanaway business is an excellent fit [with Transpacific] and we are very happy this opportunity has arisen again,” Terry Peabody, Transpacific’s chairman, said.
KKR has been a leading player in the billion dollar buyout bids that have taken Australia by storm in recent months.
A consortium led by the US group last Friday became the first bidder to gain exclusive access to due diligence on Coles in an auction that is almost certain to result in Australia’s biggest buyout transaction – topping A$20bn.
As well as its pursuit of Coles, KKR in November set up a A$4bn joint venture with Kerry Stokes’ Seven Network.
The acquisition of Cleanaway is the latest in a flurry of purchases for Transpacific since it listed two years ago on the Australian Stock Exchange. Last year the company acquired Waste Management NZ, New Zealand’s largest waste collector, for NZ$880m.