China’s record waste deal is far from rubbish

February 5, 2016

The author is a columnist for Reuters Breakingviews. The opinions expressed are her own.

China’s biggest-ever German takeover is a far from rubbish deal. State-backed Beijing Enterprises is buying Energy from Waste (or EEW) for $1.6 billion. The Chinese conglomerate, an odd hybrid of utility and brewer, won a fierce contest to buy EEW, which collects and burns waste to make electricity, heat and steam. This deal comes amid a record blitz of foreign deals from China – but unlike some of the splashier examples, looks decently priced and makes obvious strategic sense.

Including debt, the deal values EEW at 9.5 times EBITDA. That is not much more than the 9 times EBITDA that Li Ka-shing’s Cheung Kong Infrastructure paid for a similar Dutch company in 2013, according to Reuters – and a lot more reasonable than, to take one example, the roughly 18 times EBITDA that Dalian Wanda recently paid for Ironman triathlons.

Moreover, clean technology is in demand in China as President Xi Jinping looks to fix the country’s chronic pollution problem, which is as much about overflowing landfills as it is about ever-present smog. EEW’s expertise will give Beijing Enterprises an edge in converting rubbish into energy. It could perhaps make use of the low-cost green financing China is pushing too, via instruments like green bonds.

The payoff will require patience. The value of trash varies from city to city, making it harder to find the more profitable markets in China. And while the industry is less competitive than in Europe, regulations are also less strictly enforced. So some firms just dump garbage rather than pay for it to be taken away. In the southern megacity of Shenzhen, an unauthorized landfill grew large enough to bury dozens of buildings when it collapsed in December. Enforcing the rules and changing bad habits will take time.

The fact Beijing Enterprises beat other Chinese suitors, including China Tianying and Beijing Capital, shows it is not alone in trying to cash in on China’s green ambitions. Expect more trashy buys.


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see

Cash is king. Chinese commies don’t need to fight with us, they’re simply buying the West and the rest one by one. Africa is sold, Americas and Europe are getting in line. Marx’s wildest dream comes true – welcome to your wonderful communist future folks!

Posted by UauS | Report as abusive

How is burning garbage “green”? The only issue that really matters right now is carbon in the atmosphere.

Posted by Thalya | Report as abusive

Couldn’t agree more Thalya that’s why I like what Anaeco in Australia and similar companies are doing. An interesting article nontheless.

Posted by PapaLaz | Report as abusive