Cleanaway Expands Industrial Services with $377M Acquisition

About Cleanaway Waste Management Limited

Cleanaway Waste Management Limited (ASX: CWY) is Australia’s largest waste management and environmental services company, headquartered in Melbourne, Victoria. Established in 1979, Cleanaway provides total waste management solutions, including solid waste collection, recycling, and industrial waste services. The company operates across 330 locations in Australia with a fleet of over 6,350 specialist vehicles. As of today, Cleanaway’s share price stands at $2.74 on the ASX.

Enhancing Cleanaway’s Market Position

This acquisition aligns with Cleanaway’s long-term Blueprint 2030 strategy, reinforcing its market leadership in industrial waste services. Contract Resources specialises in catalyst handling, decontamination, and chemical cleaning, which are critical services for the oil and gas industry. By integrating Contract Resources, Cleanaway will be able to offer a more comprehensive range of industrial solutions, enhancing its position as a key player in the sector. Furthermore, Cleanaway’s ability to service major LNG and refinery sites in both Australia and the Middle East will significantly strengthen its industrial services division.

Financial Impact and Cost Synergies

The acquisition values Contract Resources at 5.9x EV/FY25F EBITDA, including synergies. Cleanaway expects to realise $12 million in cost synergies annually, primarily through operational efficiencies and cross-selling opportunities. The deal is projected to be earnings per share (EPS) accretive in the first 12 months and deliver a double-digit internal rate of return (IRR) both pre- and post-synergies. Despite being fully debt-funded, Cleanaway’s net debt-to-EBITDA ratio is expected to remain at a manageable 2.5x, ensuring financial stability. Additionally, the acquisition supports Cleanaway’s broader efforts to enhance profitability and drive long-term revenue growth by integrating high-margin, technically complex services into its portfolio.

Expanding into the Decommissioning and Remediation Market

One of the major advantages of acquiring Contract Resources is the expansion into the decommissioning, decontamination, and remediation (DD&R) market. Cleanaway estimates that the offshore oil and gas decommissioning market will be worth $43 billion between 2025 and 2075. With Contract Resources’ expertise, Cleanaway is now well-positioned to capture a significant share of this growing market, unlocking new revenue streams. This move is particularly relevant given the increasing regulatory requirements and industry-wide focus on environmental responsibility. By leveraging Contract Resources’ deep customer relationships and technical expertise, Cleanaway will be able to offer comprehensive solutions to clients seeking to meet stringent environmental and safety standards.

Regulatory Approval and Completion Timeline

The transaction is subject to approval from the Australian Competition & Consumer Commission (ACCC) and other customary regulatory conditions. The acquisition is expected to be finalised by late 2025. Once completed, Contract Resources will operate under Cleanaway’s ownership, with business operations continuing as usual for existing clients. Cleanaway has assured stakeholders that the integration process will be managed carefully to ensure a smooth transition while maintaining the high-quality services that Contract Resources’ customers expect.

Cleanaway’s acquisition of Contract Resources is a strategic step towards strengthening its industrial services division. By leveraging Contract Resources’ expertise and established customer base, Cleanaway is poised for long-term growth and increased market share in the high-value waste management sector. With a focus on financial stability, operational synergies, and market expansion, this acquisition reinforces Cleanaway’s commitment to innovation and sustainability in the waste management industry.