Cleanaway Waste Management's Slow Growth Helps EQT's Bid, Says Jefferies

MT Newswires Live14:42

Cleanaway Waste Management's (ASX:CWY) fiscal 2027 guidance suggests earnings improvement will take time, which could benefit EQT Infrastructure by allowing it to acquire the business before the recovery is fully reflected in its valuation, according to a Thursday Jefferies note.

The company on Thursday said it received a conditional, non-binding indicative proposal from EQT Infrastructure to acquire all of the company's shares through a scheme of arrangement at AU$3.13 apiece.

The company's fiscal 2027 earnings before interest and taxes (EBIT) guidance range of AU$500 million to AU$530 million is below estimates, and therefore this bid does insulate shareholders from another disappointing result, while supporting the Board's intention to recommend, Jefferies said.

"Cleanaway has continued to disappoint relative to market expectations over the last five years. EQT's approach is therefore understandable, given the option to make changes to the business and deliver stronger cash flow growth in the medium-term.", the note added.

Jefferies kept a buy rating on Cleanaway with a price target of AU$3.05.

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