Shanks in talks to buy recycler Van Gansewinkel for 440 million euros

By Rahul B

(Reuters) - British waste manager Shanks Group Plc (SKS.L) said it was in talks to buy Dutch recycler van Gansewinkel Groep BV (VGG) for about 440 million euros (377 million pounds) in cash and stock, on a debt-free cash-free basis.

Shares in Shanks Group fell about 11 percent on Thursday morning as trading resumed after a suspension of the stock from May 24.

A combination of Van Gansewinkel with Shanks would bring together two of the three largest players in the Dutch recycling market, a consolidation that analysts say is needed to reduce overcapacity.

VGG shareholders would get about 510 million euros, including 306 million euros in cash and a share consideration of up to 204 million euros, representing 29 percent shares in the combined company. The payment includes the underlying net cash in the VGG business, .

Shanks Chief Executive Peter Dilnot told Reuters that the company has been "looking at this asset (VGG)" for many years and that it was very well placed in the Benelux market to make an objective judgement about the deal.

"Despite the uncertainty in the equity market and the Brexit vote, the deal still makes sense in a range of scenarios," Dilnot said adding that he expects the deal to close by November or December.

VGG, founded by van Gasewinkel in 1964, had full-year revenue of 944.9 million euros in 2015 and reported an EBITDA, before non-trading and exceptional items, of 81.8 million euros.

In May Reuters reported that Shanks was considering a bid for Van Gansewinkel, Benelux's largest waste management company. Mergermarket earlier reported that the talks were on.

Shanks said the deal had a 'compelling' strategic rationale with significant potential cost synergies.

Shanks said the companies agreed for mutual break fees of about 3.2 million pounds. The period of exclusivity will run until mid-September.

($1 = 0.9028 euros)

(Reporting by Rahul B in Bengaluru; Editing by Sunil Nair and Gopakumar Warrier)