Cleanaway Waste (ASX:CWY), a prominent waste management company, is set to acquire oils recycler Australian Eco Oils (AEO) for $39 million. The move is seen as an attractive entry point for Cleanaway into a new and adjacent market.
Operating under the Scanline brand, AEO is a leading collector and processor of used cooking oil (UCO). The company processes approximately 11,500 tonnes of UCO per year from 1,500 customers across 4,000 collection points. The processed product is then sold to the stockfeed and renewable fuel sectors. In the financial year 2024, AEO is projected to generate annualised earnings before interest and taxes of $4 million.
The acquisition encompasses three licensed processing facilities located in New South Wales, Queensland, and Victoria. These facilities have a combined capacity of 30,000 tonnes per year. Additionally, Cleanaway will gain a fleet of 26 vehicles and around 30 employees as part of the deal.
Mark Schubert, Chief Executive of Cleanaway, highlighted the significance of the acquisition, particularly given the growing importance of high-quality, traceable UCO as a feedstock for renewable fuel production. He emphasised that Cleanaway’s Liquids & Technical Services strategic business unit, which includes their leading grease trap business, will be expanded to provide more circular and lower carbon solutions to restaurants and other food service customers.
The demand for renewable fuels, including Sustainable Aviation Fuels and Renewable Diesel, has been on the rise, making UCO an increasingly valuable resource. By venturing into the oils recycling sector through the acquisition of AEO, Cleanaway aims to tap into this growing market and bolster their service offerings.
The deal represents Cleanaway’s strategic move to diversify its operations and extend its presence in sustainability-focused sectors. As the demand for renewable energy sources continues to surge, Cleanaway is positioning itself to meet evolving customer needs while contributing to a more environmentally friendly future.