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Shanks pulls out of Carlyle takeover talks

SHARES in waste management group Shanks slumped by as much as 20 per cent after it pulled out of takeover talks with US private equity group Carlyle.

The FTSE 250 group says it is unwilling to recommend a final price of 120p cash per share, claiming the £475m offer undervalues the company and its prospects.

Adrian Auer, chairman of Shanks, said the board's response "has always been about price".
"Although the timing of their approach was not of our choosing, we have engaged fully and professionally, but Carlyle has failed to offer a price which - in the view of the board - properly reflects the value of the group," he added.

Back in December Shanks announced it had received an unsolicited approach from Carlyle for a potential cash offer of 135p a share.

This would have valued the group at more than £530m.

However, the board indicated at the time that it was looking for 150p a share. Its two biggest institutional shareholders – Legal & General and Schroders – who together own more than 30 per cent of the group had given their support at this level.

Shanks, which focuses on three key areas of recycling, organic processing and UK private finance initiatives, said trading conditions for the waste industry across Europe are "challenging" but it remains "very confident" in the group's longer term prospects.

Last month the group, which which has operations in the Netherlands, Belgium, the UK and Canada, warned that its results will come in "slightly below" the board's previous expectations due to adverse weather conditions.

Shanks is the only independent UK waste management group remaining after the buy-outs of rivals Cory and Biffa in 2005 and 2008 respectively.