SINGAPORE (THE BUSINESS TIMES) - Sembcorp Industries, through its wholly-owned subsidiary SembWaste, has entered into a sale and purchase agreement with Veolia Environmental Services Asia to acquire Veolia ES Singapore and the public cleaning business of Veolia ES Singapore Industrial for about $28 million, it said in a bourse filing on Friday (Dec 3).
The businesses to be acquired hold contracts for public and commercial waste and recyclable collections which cover recovery and recycling, public and commercial cleaning services, as well as associated properties which include a materials recovery facility, said Sembcorp.
Sembcorp Industries' senior vice-president (waste management) Neo Hong Keat said sustainability needs scale in the environmental business.
"After the acquisition, SembWaste's fleet of vehicles would have doubled to close to 400. Such scale will enable the business to invest in a more efficient trucking fleet using cleaner fuels."
The consideration, which will be internally funded and paid in cash, takes into account the earnings, book value of the business and existing contract values.
It is subject to regulatory approval and is not expected to have a material impact on the earnings per share and net asset value per share of Sembcorp for the financial year ending Dec 31, 2020.
Four public waste collectors serve six sectors in Singapore, according to the National Environment Agency's website. SembWaste serves two sectors while Veolia ES Singapore serves one - the Clementi-Bukit Merah sector.
The other two collectors are 800 Super Waste Management, which was delisted from the Singapore Exchange's Catalist board in August last year, and Colex Environmental.
Sembcorp shares closed 1.3 per cent down to $2.28 on Friday.