Biffa ponders £1.4bn bid from US firm amid potentially costly HMRC probe
Waste management company Biffa has signalled it would be willing to accept a potential £1.4 billion bid from a US investor.
The company also revealed it is under investigation by HM Revenue and Customs, a probe which could ultimately cost as much as £153 million.
The business, which operates waste collection services in Cannock, South Staffordshire and Stafford, said HMRC is concerned about whether it has met landfill tax rules.
Biffa said it "strongly refutes HMRC's concerns" but is co-operating with its inquiries.
It has not yet received a formal tax claim from the authority, but said there are a range of possible outcomes which make it difficult to calculate the future cost of the investigation.
"The potential liability could range from approximately £170,000 ... up to a possible maximum of approximately £153 million ... plus penalties and interest," it said.
Biffa said Energy Capital Partners (ECP), which says it invests in sustainable businesses, has indicated it would be willing to offer 445p per share for Biffa.
The board said it has "carefully evaluated" the proposal and considered the impact of the HMRC probe on whether the deal is worthwhile.
"The board of Biffa has concluded that, should a firm offer be made on the same financial terms as the proposal, it would be minded to recommend it to Biffa shareholders," it said.
ECP is now being given the material it needs to do due diligence on Biffa.
The company delayed its results because of the proposal. They were meant to be published next week, but will now wait until the end of the month instead.
Biffa said it is still trading well and the underlying performance is in line with the board's expectations.
It is mitigating the impact of inflation, bosses added.
Shares rose more than 28 per cent, but fell well short of the 445p proposal, trading at 416.85p on Tuesday.
