Cleanaway Waste Management announced its agreement to acquire Citywide Waste, the waste and recycling business of Citywide Service Solutions, for $110 million.
As part of the deal, Cleanaway will also enter a 35-year lease for the waste transfer station at 391-395 Dynon Road in West Melbourne, the second-largest waste transfer station in Victoria, situated five kilometres from Melbourne’s central business district.
Citywide Waste currently serves around 1,500 municipal, commercial, and industrial customers in Melbourne, including the Melbourne City Council, and processes over 200,000 tonnes of waste and recycling material annually.
Cleanaway said it has committed to redeveloping the Dynon Road facility into a larger, more efficient post-collections facility at an estimated cost of $35 million, with an additional $10 million contribution from the City of Melbourne over the first four years of ownership.
“This transaction represents an attractive opportunity to expand our Solid Waste Services business in metropolitan Melbourne,” said Cleanaway CEO & Managing Director Mark Schubert.
“Integrating Citywide Waste into our network is expected to deliver valuable efficiencies, while facilitating growth through the broadening of our municipal and C&I collections capabilities.”
Schubert highlighted the strategic benefits of the redevelopment: “The re-development of Dynon Road will almost double its current operating capacity, unlocking attractive earnings growth for shareholders. It will also support future volume growth into our post collections infrastructure assets.”
Securing the Dynon Road site offers a strategic position in Melbourne’s densely populated metropolitan area and aligns with Cleanaway’s BluePrint 2030 strategy.
“We are confident that the acquisition of this unique asset will deliver attractive returns to shareholders over the life of the lease,” Schubert added.
Citywide Waste reported an EBITDA of $10.7 million and an EBIT of $6.4 million for the twelve months ending February 2024.
Depending on the timing of the acquisition’s completion, Cleanaway said it is not anticipated to significantly contribute to EBIT in FY25.
However, the integrated earnings contribution, factoring in the post-collections value of the collected volumes, is expected to be substantial and to grow with the increased capacity following the redevelopment.
