Billionaire Li Ka-shing’s Cheung Kong Holdings Ltd. and partners agreed to buy AVR Afvalverwerking BV from Van Gansewinkel Groep BV for 943.7 million euros ($1.3 billion) to add waste processing in Europe.
The bidding group will consist of Hong Kong-based Cheung Kong, Cheung Kong Infrastructure Holdings Ltd., Li Ka Shing Foundation Ltd., and Power Assets Holdings Ltd., according to a statement today. Eindhoven-based Van Gansewinkel is owned by private equity firms CVC Capital Partners Ltd. and KKR & Co.
This deal is the second waste treatment investment Cheung Kong made this year, following the NZ$501 million ($405 million) purchase of New Zealand’s EnviroWaste announced in January. Buying AVR Afvalverwerking gives Li control of the company with the largest waste treatment capacity in Europe, according to a separate statement.
“AVR’s earnings growth is quite significant,” said Dennis Ip, a Hong Kong-based analyst at Standard Chartered Plc. “There’s growth potential in European countries where there’s great focus on environmental protection,” he said.
Net profit at AVR was about 42.3 million euros in 2012, up from 20.7 million euros in 2011, according to the statement today. The company, which isn’t publicly traded, is the largest energy from waste company in the the Netherlands, with plants at Rozenburg near Rotterdam and Duiven, close to the German border, according to the statement.
Conditions for completion of the acquisition include competition authority clearance, according to the statement.
Cheung Kong gained 3.7 percent to close at HK$108.60 in Hong Kong, while Cheung Kong Infrastructure climbed 3 percent to HK$53.45. The benchmark Hang Seng index rose 1.2 percent.
Credit Suisse Group AG advised Van Gansewinkel, according to a statement on its website. HSBC Holdings Plc advised the bidding group, according to Wendy Tong Barnes, Cheung Kong’s spokeswoman.
Cheung Kong Infrastructure “is making good inroads in the area of waste management,” Managing Director Kam Hing Lam said in a separate statement. “With waste treatment being an imminent issue in most places around the world, we see good growth potential in this business.”
The acquisition adds to utilities and infrastructure purchases Li has made in markets including Europe in the past three years. In 2012, Li almost doubled the size of the gas transmission businesses his companies control in the U.K. after acquiring Wales & West Utilities Ltd.
Cheung Kong and Cheung Kong Infrastructure will each hold 35 percent of the bidding joint venture, while Power Assets will hold 20 percent and the rest held by Li Ka Shing Foundation, the statement said.