The Bingo Industries Ltd (ASX: BIN) share price finished 5.7% higher today after offering to divest its waste processing facility in Banksmeadow.
Bingo Industries is a waste management business, it provides residential and commercial waste services, recycling services and bin manufacturing. It started in 2005 when the Tartak family purchased a small skip bin business.
Why the Bingo share price finished 6% higher
A few months ago Bingo announced it was acquiring Dial A Dump for $577.5 million, a fully integrated recycling and waste management business in New South Wales for $577.5 million.
Dial A Dump has complementary post-collections assets including the Genesis Waste Facility at Eastern Creek, a recycling and landfill asset with approved capacity of up to 2 million tonnes per annum and a remaining useful landfill life of around 15 years.
Bingo said at the time that there were compelling future growth opportunities and synergy benefits. It was expected to be mid-single digit earnings per share (EPS) accretion before synergies and more than 15% EPS accretive including synergies.
However, the Australian Competition and Consumer (ACCC) had some concerns about what this would do for competition.
Today, Bingo announced it has offered to sell its waste processing facility in Banksmeadow which would include all the assets to run the facility and site personnel. If the sale occurs it should lead to surplus funds, which could be used for a share buy-back.
The ACCC wil now undertake further market consultations about Bingo’s offer. One of the businesses which may have a say is Cleanaway Waste Management Ltd (ASX: CWY).
Bingo Managing Director and CEO Daniel Tartak said: “We remain firmly of the view that the acquisition would not substantially lessen competition in any relevant market, including landfill and Building and Demolition (B&D) processing.”
If the acquisition is allowed to go ahead, it could make Bingo a compelling business for investors. It has defensive earnings, plus a growing population could mean a growing profit profile for shareholders. Households and businesses continue to produce waste week after week, after all.
Bingo isn’t the only defensive business on the ASX, there are other reliable shares to consider.
3 Proven ASX Shares With Growing Profits
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