Mergers and acquisitions in the European waste management industry 2000-2001 21/03/01
Mergers and acquisitions in the European waste management industry 2000-2001
Report for waste meeting of EPSU trade union representatives
By Steve Davies
Senior Research Fellow, School of Social Sciences, Cardiff University
February 2001
This report was commissioned by EPSU and received financial support from the European Commission. The views contained within are those of the PSIRU and the Commission is not liable for any use that may be made of the information contained within.
1. Introduction and summary of developments 2
2. Mergers and Acquisitions 3
2.1 Waste Management Inc 3
2.2 Suez Lyonnaise 4
2.3 Vivendi 5
2.4 Rethmann 6
2.5 RWE 6
2.6 Cleanaway 7
2.7 Shanks 7
2.8 Activity of other waste companies 8
¨ ASA 8
¨ Biffa 8
¨ Marius Pedersen 8
¨ Italcogim 9
¨ Indaver 9
¨ Van Gansewinkel 9
¨ Others 9
2.9 Relative Size of the waste management multinationals 9
¨ Waste management multinationals: annual revenue 10
3. Trade union rights in mergers and acquisitions 10
3.1 Acquired Rights Directive 10
3.2 Other relevant Directives 11
3.3 Possible future legislation 11
4. Action for EPSU 12
4.1 Trade union organisation at company level 12
4.2 Works councils (national) 12
4.3 EWCs 12
4.4 Trade union affiliation to EPSU/PSI 12
5. Annex 1: WMI withdraws from Europe 14
6. Annex 2: WMI withdraws from the rest of the world 15
7. Sita subsidiaries in Europe 16
8. Fabricom subsidiaries in Europe (currently being integrated with Sita) 19
9. Onyx subsidiaries in Europe 20
10. Notes 22
1. Introduction and summary of developments 2
2. Mergers and Acquisitions 3
2.1 Waste Management Inc 3
2.2 Suez Lyonnaise 3
2.3 Vivendi 5
2.4 Rethmann 5
2.5 RWE 6
2.6 Cleanaway 6
2.7 Shanks 7
2.8 Activity of other waste companies 7
¨ ASA 7
¨ Marius Pedersen 7
¨ Italcogim 7
¨ Indaver 7
¨ Van Gansewinkel 8
¨ Others 8
3. Trade union rights in mergers and acquisitions 8
3.1 Acquired Rights Directive 8
3.2 Other relevant Directives 8
3.3 Possible future legislation 9
4. Action for EPSU 9
4.1 Trade union organisation at company level 9
4.2 Works councils (national) 10
4.3 EWCs 10
4.4 Trade union affiliation to EPSU/PSI 10
5. Annex 1: WMI withdraws from Europe 11
6. Annex 2: WMI withdraws from the rest of the world 12
7. Sita subsidiaries in Europe 13
8. Fabricom subsidiaries in Europe (currently being integrated with Sita) 15
9. Onyx subsidiaries in Europe 16
10. Notes 18
1. Introduction and summary of developments
The last year has seen some major changes in the waste management industry within Europe.
The industry has continued to consolidate at speed with frequent mergers and acquisitions.
In addition there has been an awareness of the potential for growth in the market based on three main areas:
- The drive for improved environmental standards across the EU and within individual member states;
- The continuation of privatisation of public services across Europe;
- The opening up of the market in central and eastern Europe.
A significant change over the last few years has been the withdrawal from Europe of the two huge US multinationals – BFI (now Allied Waste) and WMI. The sheer size of the North American market and their position in it means that in sales terms, they are still the world’s largest waste companies. However, outside North America, they have virtually no presence at all, and their places have been taken by the French multi-utilities, Vivendi and Suez Lyonnaise. The two French multinationals are now making inroads into North America. In 1999, Vivendi bought what was the Number 4 in the US waste market – Superior Services.
The two main companies active in Europe are the waste divisions of the French multi-utilities, Vivendi Environnement and Suez Lyonnaise des Eaux – Onyx and Sita, respectively. German companies, RWE and Rethmann are also important European players and are particularly active in central and eastern Europe.
British-Australian joint venture, Cleanaway continues to have an important position in the UK and Germany and British company Shanks has recently extended its European presence with acquisitions in the Netherlands and Belgium.
What is also noticeable is that in central and eastern Europe, apart from RWE and Rethmann, there is considerable activity by smaller companies based in Austria and Germany. These include ASA, Becker, Lobbe, Saubermacher and Rumpold.
Trade unions within the EU need to familiarise themselves with all the relevant Directives. There is also some further proposed legislation under discussion at European level.
Both EPSU and its affiliates can use the continuing round of mergers and acquisitions to strengthen trade union organisation across Europe and assist workers to defend jobs and conditions in those companies affected by takeovers.
(I’d be inclined to blob these points, but that’s style.)
2. Mergers and Acquisitions
Among the main companies in the sector, there have been a series of mergers, acquisitions, rationalisations and attempted mergers. A selection of the mergers and acquisitions involving the main waste management companies follows.
2.1 Waste Management Inc
WMI has now completely withdrawn from Europe, and almost completely retreated worldwide to its North American base. It used to have operations in most major European countries but as is shown by the attached charts (Annex 2 and 3), it has sold all of its European subsidiaries to its former rivals, and is rapidly withdrawing from everywhere else as well. According to the company, towards the end of 2000, it only had operations remaining in Indonesia, Argentina and Israel – and these were intended for sale as soon as possible.
This follows the equally dramatic withdrawal of Allied Waste/BFI from the rest of the world to North America. BFI had been world and North American Number 2. It was taken over by Allied Waste in 1999. The new merged company continued the divestment programme begun by BFI before the merger. BFI had sold most of its non-North American operations to Sita in 1998. Part of the deal was that BFI acquired a 20% holding in Sita. Following the 1999 merger with BFI, Allied Waste sold its Sita holding to Suez Lyonnaise.
Both the big US companies were taken over by smaller US companies, and for similar reasons. These included problems with the US competition authorities, a view that the companies were too stretched, had built up too much debt and, in WMI’s case, was facing shareholder lawsuits as well.
They are now beginning to be placed under pressure in their home market, for example by the 1999 purchase of Superior by Vivendi (Superior was No 4 in the US).
2.2 Suez Lyonnaise
In November 2000, Suez Lyonnaise announced the ‘refocusing’ of its core businesses. Tractebel will become the single focus of its operations in the energy sector and Sita will become the focus for the waste operations.
The means of this refocusing involves a complicated series of link-ups which parent company, Suez Lyonnaise described as follows:
“- Fabricom Group (a Tractebel subsidiary) and SITA will combine their activities in the special industrial waste (SIW) sector. Fabricom Group will hold a substantial stake in the new entity;
- In the domestic and normal industrial waste sectors, SITA and Fabricom Group will join forces in a new entity covering the Benelux countries and in which SITA will be the majority shareholder. Watco's management will remain in charge of operations (Watco is a subsidiary of the Fabricom Group);
- Fabricom Group's other waste sector activities, especially EdS (Européenne de Services), will be sold in full to SITA. Special measures will allow for specific local markets such as Poland
- Watco's Managing Director Yves Debruyne will take charge of the Benelux entity and will be invited to become one of the SITA group's two General Managers, working with Jacques Pétry, Chairman and CEO, and Dominique Pin, General Manager.
A special committee of Tractebel directors has been appointed to value the assets concerned, with the aid of an investment bank.”.[1]
In the past, Sita and Watco have ‘competed’ against each other for contracts. It is not clear as yet whether this approach will continue in some form.
This will mean that Sita has effective control of all Suez Lyonnaise waste activities. The total number of employees under Sita now, including those in the former Fabricom, is around 67,000. Sita has operations in 20 European countries and claims to be the leading waste management company in Europe.
Sita has also set up a one-stop shop for its European multinational customers. By bringing together its subsidiaries in France, the UK, Germany, Spain, and the Netherlands together with Teris, it aims to “offer industrial clients a made-to-measure service for managing their waste, applicable to all or some of their sites.”[2]
In January 2000, Miljöservice, a Swedish SITA subsidiary, signed an agreement with the Municipality of Stockholm to acquire 100% of Stockholm Miljötransport (SMT). SMT is a municipal company which collects domestic and industrial waste and recyclable products in the centre of Stockholm.
In February 2000, Sita announced an agreement to acquire 58% of Danish waste management company Renoflex A/S, which is active in the region of Copenhagen.
Through the agreement Sita acquires the share of Renoflex previously held by the municipalities of Copenhagen and Fredriksberg. R98, the city of Copenhagen’s domestic waste collection contractor, will keep possession of the remaining 42%.
This acquisition means that Sita now has a presence in Denmark, Sweden and Finland. Miljöservice, (Sita’s Swedish subsidiary) is already a partner of Renoflex through a joint venture in domestic waste collection in Malmö.
In September 2000, Sita bought 91% of WMI’s Swedish operation, WM Sverige. Sydkraft, a private Swedish electricity company part owned by German conglomerate Eon, acquired the rest. Waste management company, Sellbergs is the main subsidiary of WM Sverige and will be merged with Miljoservice. Sita claims that this will result in the company becoming “one of Sweden's domestic waste market leaders”.[3] As part of the deal Sita also acquired 9% of Sakab (involved in hazardous waste treatment and district heating), with 91% being held by Sydkraft. It says that once merged with its other holdings in Sweden, Sita will be the private sector market leader in the industry in Sweden.
In the Netherlands, Sita has bought ARA, the municipal company serving the inhabitants of Arnhem. Although it concedes that 64% of the collection and treatment of household waste in the Netherlands is carried out by the public sector, it now claims to be a leader in the private segment of the Dutch market.
Sita’s largest subsidiary is Sita France. Sita claims to be the market leader in the UK. Through its CESPA subsidiary (a 50-50 joint venture with Aguas de Barcelona, itself owned 25% by Sita’s parent, Suez Lyonnaise), it claims to be Number 2 in the Spanish-Portuguese market.
Following its 1999 acquisition of the remaining 50% of shares of OTTO that it did not already own, Sita Deutschland now claims to be Number 3 in the German waste market. - after RWE and Rethmann.
2.3 Vivendi
In 1999 and 2000 Vivendi regrouped its businesses by After the conclusion of a series of sales and transfersconsolidating all its waste management, water, transport and energy services into 4 divisions: Onyx (waste), Vivendi Water, Connex (transport) and Dalkia (energy services), together with its holding in Spain’s FCC.
All of these divisions were then made part of a new company, Vivendi Environnement. The rest of Vivendi was formed into a communications section. The debt of the entire group was moved to Environnement and the company this left the new company with all the previous group’s debt and the media side of the Vivendi empire debt-free. Vivendi Environnement was then part floated on the Paris Bourse in 2000. Vivendi now holds a 72% interest in Vivendi Environnement.[4]
Onyx now claims to be the largest waste management company in Europe and world Number 3[5] (after the US waste companies).
It is active in both the EU and central and eastern Europe (Czech Republic, Hungary, Poland and Slovakia).
Vivendi Environnement has agreed to merge its wholly-owned subsidiary Norskgsenvinning, which it claims is the leading waste management company in Norway, with a company that owns 100% of Marius Pedersen, the Danish waste management firm. Vivendi Environnement will own 65% of the surviving entity, which it says “will be the market leader in Central Europe as well as Scandinavia.”[6]
In July 2000,Vivendi Environnement and FCC (in which Vivendi has a 28% holding) entered into an agreement under which Vivendi Environnement purchased 50% of Proactiva (FCC’s water and waste water subsidiary, active in Latin America and the Caribbean) the remainder being retained by FCC.
Vivendi claims that FCC is the leading private provider of waste management services in Spain, with a share of the market for waste management services of approximately 43%. Its primary competitor in this market is Cespa (part owned by Suez Lyonnaise). Vivendi intends to conduct its waste operations in Latin America through Proactiva Medio Ambiente, part of the joint venture with FCC.
2.4 Rethmann
In January 2001, the German competition authorities blocked the planned merger of Rethmann and Interseroh. Ulf Boge, President of the competition authority, said that the two would have a share in excess of 50% of the industrial waste disposal business, giving it a dominant position in the market.
Rethmann now intends to scale down its interest in Interseroh from 24.9% to around 15%.[7]
Rethmann is active in Austria, Belgium, France, the Netherlands, Switzerland and the UK and continues to have a major presence in central and eastern Europe with holdings in the Czech Republic, Hungary, Poland, and Slovakia.
2.5 RWE
RWE has gone through a number of major changes. It has completely restructured its operations into eight main companies following the merger with VEW. Its waste management operations are now carried out by RWE Umwelt.