The Cleanaway board has said it will recommend shareholders accept the ~$6.9bn bid by Swedish private equity firm EQT and has granted EQT up to nine weeks of exclusive due diligence access. The deal is at an early, non-binding stage and is subject to due diligence, financing, regulatory clearance, and shareholder approval. The wide deal spread is the clearest market signal that significant execution risk remains but the risk/reward is attractive at current levels in what is a likely to be a binary outcome, i.e. deal goes ahead at $3.13 – or it falls over, and CWY is likely to be trading below $2.50.
- We are bullish towards CWY, liking the risk/reward after the $3.13 bid by EQT – 15% above Fridays close.
Trade Idea: Buy Cleanaway Waste Mgt (CWY) using a limit of $2.69, with stops at $2.43, around 10% risk.
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