Cleanaway to acquire Contract Resources to boost industrial services

MELBOURNE: Cleanaway Waste Management (ASX: CWY) announced on Thursday that it has agreed to acquire 100% of the shares of Contract Resources Group Pty Limited, a specialist provider of production-critical technical services for the oil and gas industry, for an enterprise value of $377 million.

The acquisition, which is expected to be completed by late 2025 pending regulatory approvals, is a strategic step in advancing Cleanaway’s Blueprint 2030 strategy. Contract Resources, known for its expertise in catalyst handling, decontamination, and chemical cleaning, brings a stable and recurring earnings stream supported by long-term customer relationships.

Mark Schubert, Managing Director and CEO of Cleanaway, said the acquisition aligns with the company’s vision for industrial services. “Contract Resources is a natural fit with Cleanaway, given its market leadership, deep sector expertise, and stable recurring earnings stream,” Schubert said.

“Its integration will enhance our Industrial Waste Services business, unlocking new opportunities and allowing us to offer comprehensive waste management solutions to a broader network.”

Contract Resources has a strong presence in Australia, New Zealand, and the Middle East, servicing major LNG and refinery sites. The company’s top 10 customers have an average tenure of 16 years, reflecting its reputation for delivering high-quality, production-critical services.

The acquisition is expected to deliver approximately $12 million in annual net cost synergies, with full benefits realized by FY28. Cleanaway forecasts high-single-digit earnings per share accretion post-synergies within the first 12 months of ownership, along with a double-digit internal rate of return both pre- and post-synergies.

The transaction will be fully debt-funded, with net debt to underlying EBITDA expected to be around 2.5x at completion. Cleanaway remains committed to maintaining an investment-grade credit rating and plans to reduce leverage through cash generation and earnings growth.

Contract Resources’ FY25 EBITDA is forecast to be approximately $52 million, with the transaction valuing the company at 7.3x EV/FY25F EBITDA, reducing to 5.9x when including synergies.

Cleanaway is Australia’s leading total waste management, industrial, and environmental services company, operating over 6,350 specialist vehicles and employing more than 7,900 staff across 330 locations nationwide.

Contract Resources is a global provider of specialist services to heavy industry, offering innovative solutions in catalyst handling, decontamination, and chemical cleaning. The company is known for its operational excellence and long-term relationships with tier 1 oil and gas clients.