Singapore (Jan 3): Sembcorp Industries is acquiring Veolia’s waste collection and cleaning services businesses, as well as associated properties including a materials recovery facility, for $28 million, the mainboard-listed group announced Friday.
Sembcorp’s wholly-owned subsidiary SembWaste has entered into a sale and purchase agreement to acquire Veolia ES Singapore (VESS) and the public cleaning business of Veolia ES Singapore Industrial (VESSI).
The businesses hold contracts for public and commercial waste and recyclable collections, including recovery and recycling, as well as public and commercial cleaning services.
Sembcorp says the proposed acquisition will strengthen its waste management and recycling business, in line with its strategy of deepening its presence as an integrated energy and urban solutions player.
Notably, SembWaste’s fleet of vehicles will double to almost 400 following the acquisition.
“Sustainability needs scale in the environmental business,” says Neo Hong Keat, Senior Vice President (Waste Management), Sembcorp Industries. “Such scale will enable the business to invest in a more efficient trucking fleet using cleaner fuels.”
“In addition, we would also be better placed to move towards automation as well as skills upgrading for a fast-changing industry that is critical to the sustainability ecosystem in Singapore,” he adds.
The consideration amount, which will be funded via internal resources, was arrived at after taking into account the earnings, book value of the business and existing contract values.
Sembcorp says the transaction is not expected to have a material impact on its earnings per share and net asset value per share for the financial year ending Dec 31, 2020.
As at 2.19pm, shares in Sembcorp are trading 3 cents lower, or down 1.3%, at $2.28.