Wake Smith has advised waste management giant Red Industries on its acquisition of West Midlands based Environmental Resource Group (ERG).
Advice by director John Baddeley and his team meant that Staffordshire-based Red Industries, could purchase competitor ERG which operated three fully permitted sites across the West Midlands through its brands Chemtech, Blendcheck, Envirosol, Hazchem, Boxclever and Safeguard.
The buyout includes ERG's waste facilities in Brownhills and Dudley, labs, offices, employees and customer base of more than 4,000 clients spanning industries which include automotive, pharmaceutical, engineering, electronics and construction.
To enable the £37.8m funding and acquisition, equity investor Business Growth Fund (BGF) invested £14m into Red Industries, taking a 40% equity stake alongside Red’s chief executive Adam Share and the management team, while HSBC provided £23.8m in loans and working capital facilities, together funding the acquisition and providing additional growth and working capital. Castle Square Corporate Finance acted as lead advisor for Red on the finance deal.
ERG will continue to operate as a wholly owned subsidiary under the branding of the Red Group.
The complex legal work was completed by a team at Wake Smith including corporate team directors John Baddeley and Rebecca Robinson who advised on the acquisition and the fundraising, director Holly Dobson dealt with employment legal matters and director Paul Gibbon on commercial property advice
John Baddeley said: "Wake Smith is delighted to have been involved in Red Industries' latest acquisition which reinforces the company's growth plans and places it in a strong position within its sector.
"This acquisition doubles the size of Red and allows the company to move into a different league. It now becomes one of the largest independent waste disposal companies in the UK."
Established in 2006, Red now operates from three locations in Burslem, Stoke, and Newcastle Under Lyme and provides waste collection, waste consultancy, hazardous waste management, recycling, recovery and treatment services, secure destruction of waste services plus sample and testing analysis to customers nationwide. The business was acquired in a management buyout in 2015 led by Adam Share.
It has grown rapidly through organic growth supplemented with a number of strategic acquisitions including the acquisition of Tarmac’s landfill business in late 2016.
The acquisition of ERG is the cornerstone of the ongoing Buy and Build strategy supported by BGF and HSBC.
The combined group has an annualised turnover of £31m and will have a combined EBITDA in excess of £7.5m, creating a platform with critical mass on which to build further through organic growth and strategic acquisitions for Red.
For further information or advice please contact John Baddeley at [email protected] or on 0114 224 2025.
