Local waste management company Tox Free Solutions has entered into an agreement to buy medical waste solutions business Daniels in a cash, scrip and debt deal worth $186 million.
Daniels operates under its Daniels Health and Daniels Manufacturing businesses, and provides medical waste solutions, collections and treatments in Australia.
It has 300 employees across 17 sites, including two incineration facilities in Sydney and Melbourne, and three joint venture-managed sites in New Zealand.
In order to fund the acquisition, Tox Free will undertake an $85 million fully underwritten entitlement offer and a $29 million placement to the vendor, both of which will be priced at $2.30 a share.
The price represents a 7.6 per cent discount to the company’s last closing price.
Tox Free will also increase its debt facilities and draw down $67 million to assist in the funding of the acquisition, with the remaining $14 million to be paid in cash from a proposed sale and leaseback transaction.
Tox Free expects to have about $159 million in net debt post-acquisition.
Daniels’ existing operational staff will become Tox Free employees as part of the agreement, while founder Dan Daniels will be retained as an adviser to the business.
He will also subscribe for 12.6 million Tox Free shares.
“The acquisition of Daniels is an exciting opportunity for Tox Free that will position us as a leader in specialist waste streams in Australia,” Tox Free managing director Stephen Gostlow said.
“Medical waste is highly complementary to our existing capabilities and focus, and Daniels provides Tox Free with a new set of capabilities and technology that we did not have before.
“In addition, the acquisition helps to improve Tox Free’s overall diversity from an operational and geographic perspective, and provides the business with a new pillar of growth into the healthcare sector.”
Morgan Stanley is acting as lead manager to the entitlement and sole underwriter, while Evans & Partners is acting as co-lead manager of the entitlement offer.
Clayton Utz is acting as legal adviser to Tox Free, while PwC is acting as accountant.
Tox Free shares remain in a trading halt, and last traded at $2.49 each.
