Bingo Industries (ASX: BIN) $2.13 as at 29/11/2018
The Waste Management business (Bingo Industries, ASX: BIN) has taken another hit today, trading down nearly 6% after the ACCC voiced concerns over its proposed takeover of Dial-a-Dump. Specifically, they said Our preliminary view is that the acquisition would remove Bingo’s most substantial competitor for B&D waste processing, particularly in the Eastern Suburbs and inner Sydney. Although alternative facilities exist, our current view is that many are not viable alternatives as they either will not accept third party mixed B&D waste, charge significantly more for heavy loads, or are too far away to constrain Bingo from increasing prices. The acquisition would remove future competition between Bingo’s and Dial-a-Dump’s dry landfills, which may lead to higher gate fees than would be likely without the acquisition.”
BIN strongly disagrees with the decision however unfortunately (for them) their interpretation is less influential than that of the ACCC. While this is a blow, the actual decision is not scheduled until the 21st February 2019.
The Bingo share price has been weak for some time, trading from $3.28 in August to a low today of $1.965 – a 40% decline. BIN raised $425m in new capital in August on the expectation the deal would be done, however it seems the market ‘sniffed out’ the ACCC’s reservations and sold ahead of the latest news.
While the deal is not yet dead, it seems that some form of concession will be required on behalf of BIN which may ultimately sway the economics of the transaction.
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