It's looking like a decent day is in store for the S&P/ASX 200 Index (ASX: XJO) this Thursday. At the time of writing, the ASX 200 has opened 0.79% higher and is back over 7,890 points. But let's talk about what's happening with the Cleanaway Waste Management Ltd (ASX: CWY) share price.
The Cleanaway share price is doing far better than the broader market this session thus far. The ASX 200 waste management stock closed at $2.55 a share yesterday afternoon. But this morning, those same shares opened at $2.67 before rising to the current level (at the time of writing) of $2.61. That's a gain worth a healthy 2.35%.
However, earlier this morning, Cleanaway shares spiked to $2.76 each, a gain worth 8.23% at the time.
We don't have to look too far to see what's going on here.
Image source: Getty Images
ASX 200 waste management stock rockets 7% on takeover news
This morning, before market open, Cleanaway announced a major acquisition. The company will be acquiring the privately owned Contract Resources Group Pty Ltd in full for an enterprise value of $377 million.
Contract Resources is a company that provides specialist waste management services, decontamination, chemical cleaning, and catalyst handling, mainly to oil and gas companies.
According to Cleanaway, the acquisition will be completely funded by debt.
As Contract Resources' earnings before interest, taxation, depreciation and amortisation (EBITDA) are expected to come in at approximately $52 million for the 2025 financial year, Cleanaway is paying roughly 5.9 times forecast earnings (including anticipated synergies) for Contract.
By integrating Contract with its own Industrial Waste Services division, Cleanaway expects to achieve approximately $12 million in annual synergies.
Here's some of what Cleanaway CEO Mark Schubert had to say about this acquisition:
Acquiring Contract Resources is a strategic step in advancing our Blueprint 2030 strategy. Contract Resources is a natural fit with Cleanaway, given its market leadership, deep sector expertise, and stable recurring earnings stream.
Its long-standing relationships with tier 1 oil & gas customers and attractive growth outlook is strongly aligned with our strategic vision for industrial services at Cleanaway. Its integration with
Cleanaway will reposition our IWS business, enhancing its scale, and unlocking new opportunities, including cross-selling our total waste management solutions into Contract Resources' well-established customer network…
Completion of this takeover is expected by late 2025. That's subject to approval from the Australian Competition and Consumer Commission (ACCC) and other regulatory bodies, of course.
It seems investors are excited about this news, judging from the reaction of the Cleanaway share price today.
Cleanaway Waste share price snapshot
It's been a relatively muted year for the Cleanaway share price. After today's gain, the ASX 200 waste management stock is sitting on a 12-month share price gain of 0.4%. The company also remains down by around 20% from its 2022 peak of over $3.20 a share.
At the current share price, Cleanaway is trading on a price-to-earnings (P/E) ratio of 39.14, with a dividend yield of 1.95%.
