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Beijing Capital Group today emerged as the winner of a four-horse race for ownership of Waste Management after writing a $950 million cheque for the former New Zealand share market favourite.
The purchase, which is yet to be approved by the Overseas Investment Office, is the biggest acquisition of a New Zealand-based business by a Chinese entity since Haier Electronics paid $927m for the remaining 80 per cent of Fisher & Paykel Appliances it did not already own in 2012.
In a statement today, Australia's Transpacific Industries said it had agreed to sell its New Zealand business to Beijing Capital, which is owned by the Beijing Municipal Government.
Competition between the four contenders - Beijing Capital, private equity company Carlyle Group, funds associated with Australian infrastructure investor Macquarie, and a syndicate of New Zealand investors that included NZX-listed NZX-listed Infratil, was close.
In the end, Beijing Capital won, both in terms of the price and in terms, according to one source close to the deal. He said Beijing Capital's interest was more strategic rather than financial, as it would offer the company - which has extensive water and waste water treatment investments in China - access to Waste Management's environmental and truck management technology.
About 20 parties had expressed an interest in Waste Management during the sale process, which started last year.
The previously NZX-listed Waste Management was highly profitable and very popular with investors before it was taken over by Transpacific for $870m in 2006.
Proceeds from the sale will allow the once heavily indebted TPI to redeem preference shares, refinance its syndicated debt facility and fund future investments with a strong capital base.
The process of selling the New Zealand operation went down a so-called "dual track", with a trade sale being actively weighed up against the option of an initial public offer and float. A trade sale was always seen as the most likely option.
There are just two main players in the New Zealand refuse collection and landfill business - Waste Management and its much smaller competitor, Envirowaste.
Managing director Tom Nickels said Beijing Capital was buying at a time when the company was seeing sustained growth - driven mostly by the Auckland and Christchurch regions.
He said it was business as usual in terms of the makeup of the company's management.
"We are very pleased and looking forward to the future and we know Beijing Capital see it the same way," Tom Nickels said in telephone interview from Hong Kong.
"Beijing Capital will bring substantial investment in the company for plant and equipment," he said.
"On the intellectual property side, Beijing Capital see the acquisition as an opportunity to gain New Zealand expertise in the environmental space," he said.
Beijing Capital is in in the top 500 of the country's trading enterprises. By the end of 2013, it had total assets and revenues exceeding US$21 billion and US$3.7b, respectively.
Completion of its purchase of Waste Management is expected to occur by the end of June this year, subject to Overseas Investment Office and Chinese regulatory approvals.
- By Jamie Gray, APNZ business reporter