Morningstar expects Cleanaway acquisition to close despite ACCC concerns
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The news: Shares in Cleanaway edged down on the ASX as Morningstar reiterated its valuation on the waste management group.
The numbers: Cleanaway shares were down 0.4% to $2.73 by 1:30pm AEDT. Morningstar kept its fair value estimate of $2.30 per share.
The context: Morningstar analyst Esther Holloway noted that Cleanaway's proposed acquisition of Citywide Waste has been delayed by the Australian Competition and Consumer Commission (ACCC), with the regulator concerned that the deal will extend the company's already dominant position in Melbourne.
However, Holloway expects the acquisition to complete during the current financial year, paving the way for Cleanaway to control the two largest waste transfer stations in Victoria.
The proposed deal is likely to receive the green light without material divestitures, Holloway said, due to existing competition in the region.
Morningstar expects continued acquisitions to enhance scale and improve operating margins from 9.6% in FY24 to 12.2% in its midcycle forecast.
The source: Morningstar research
