Cleanaway shares are rising following its acquisition of Melbourne-based Citywide – Capital Brief

The news: Cleanaway shares are trading higher after the waste management giant agreed to buy Melbourne-based Citywide Waste.

Numbers: Cleanaway said it would pay $110 million for its waste and recycling business and Citywide assets.

As part of the deal, Cleanaway will also spend a further $35 million to redevelop the Dynon Road waste transfer station – the second largest in Victoria – with the City of Melbourne adding a further $10 million.

Cleanaway shares rose 1.5% to $2.73 on the news.

Context: Cleanaway said the acquisition is highly complementary as it expands its waste collection business and service infrastructure network in Melbourne.

Citywide services 1,500 municipal, industrial and commercial customers in Melbourne, and the transfer station receives 200,000 tonnes of waste and recycling materials annually.

The company noted that the acquisition will not significantly impact earnings in FY25, but the earnings contribution on an integrated basis was significant and is expected to grow.