UPDATE 1-Waste Italia in talks to sell to China's Sound Global

Thu Nov 7, 2013 12:28pm EST

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By Massimo Gaia and Stephen Jewkes

MILAN Nov 7 (Reuters) - Italian waste management operator Waste Italia is in talks to sell the company to China's Sound Global, the main shareholder of Waste Italia said on Thursday.

"They made an offer in July which we judged inadequate. They have now relaunched and we are starting to work on it," Pietro Colucci told Reuters in an interview.

Colucci, the head of Italian renewable energy company Kinexia, owns 63.7 percent of Waste Italia, the country's largest private manager of industrial waste.

Italian private equity firm Synergo owns another 32.7 percent. It is keen to exit its investment but to date no solution palatable to both investors has been found.

To meet Synergo's demands, Colucci has agreed to the talks with water and waste treatment provider Sound Global, which has a market value of around $730 million.

Colucci said if a deal with the Asian group did not happen, Waste Italia would be merged with Kinexia, with Synergo receiving Kinexia shares that it could then sell - an option he preferred.

"Synergo is pushing to sell the whole company while our idea would be to merge Waste Italia with Kinexia and increase the critical mass to become a national player," he said.

Italy's waste management sector is drawing considerable attention from domestic and foreign investors as new European Union regulations prompt change in a country where landfills rather than waste-to-energy plants are the norm.

The sector is fragmented with waste services in the hands of small local utilities. Colucci said a merger with Kinexia would create a national player able to bring on board other operators.

"In around 5-6 months we will know what the destiny of Waste Italia is," he said.

Waste Italia, which according to Colucci has an equity value of 85-90 million euros ($114-120 million), expects revenues this year of around 83 million euros. ($1 = 0.7472 euros) (Editing by Pravin Char)

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