The editorial team responds to a subscriber’s question: “An offer has been made on Renewi. What to do? Go there, or wait a little longer?”
Renewi is a European recycling company that creates value from waste, helping to reduce its environmental footprint in the markets where it operates. It was born in 2017 from the merger of two waste management companies: Shanks Group and Van Gansewinkel Groep. The company collects and processes a wide range of waste; using innovative processes, it converts them into materials that it resells. Leader on the Dutch and Belgian markets, Renewi has the scale to invest in innovative techniques and machines, and can thus maintain or strengthen its competitive position. Renewi serves a plethora of sectors and plays an active role in the transition to a circular economy. As such, Renewi is the little brother (1/5 of the turnover (CA)) of the American group Waste Management.
Renewi revealed that it had successfully completed two problematic files in its UK Municipal and Mineralz & Water divisions: it sold the first and restructured the second. Profit margins are all the better for it. Management ultimately anticipates turnover growth of around 5% driven by inflation and a slight increase in market share. Profit will grow much faster thanks to improved margins. In addition, cash flow is improving and Renewi has a stronger balance sheet, which reduces risk for investors and would justify a higher valuation. That said, the quickest way to make the latter rise is to issue stable and reliable forecasts, and beat them.
Renewi had already been the subject of a takeover bid in 2023 but management had refused it. On November 28, 2024, we learned that Macquarie was considering a new offer for it: the asset manager intends to offer 10.40 euros per share. The price then went from almost 7 euros to 9.60-9.70 euros. The offer is supported by management and several shareholders, who together own 19% of the shares. Macquarie is due to respond by January 23. This gives investors time to see how the stock will evolve. It is still trading some 8% below the offer price. But as the rise in price has obviously boosted the valuation, we are lowering our advice to “sell” (rating 3B). So you can accept the offer at this price. Or wait for Macquarie to confirm it in January to sell at a price closer to its price.
Belgium
