Cleanaway's Takeover Bid Arrives, but Its Biggest Holder Wants a Higher Price

A year of earnings downgrades and a 30% de-rating ended with a private equity approach that fund managers say still doesn't reflect the value of Cleanaway's infrastructure assets.

12 Oct 2026 · 3 min read

Cleanaway received a $3.13-a-share takeover proposal from EQT Infrastructure in August, a 32 percent premium the board is prepared to support pending due diligence, capping a year in which the waste management group's shares de-rated around 30 percent on repeated earnings downgrades, even as several fund managers argue both the underlying business and now the bid itself undervalue a genuinely hard-to-replicate infrastructure franchise.

A dominant franchise that kept disappointing on earnings

Investors Mutual Limited described Cleanaway as holding around 40 percent market share in a consolidated Australian waste industry, calling its transfer stations and metro-area landfills halo assets that would be almost impossible to replicate given how difficult it is to site new waste infrastructure near residential areas. The fund pointed to fleet upgrades and route digitisation improving margins, and said management had confirmed double-digit earnings growth guidance for both FY26 and FY27, arguing the roughly 30 percent de-rating this year had left the stock cheap at around 20 times earnings for that growth profile.

They own the transfer stations, they own the landfills, a lot of which are in metro areas. Nobody's going to accept a new one being put in their neighborhood.

— Investors Mutual Limited, Interview, July 2026

Wilson Asset Management offered a sharply different read on the same business, arguing Cleanaway has historically disappointed and calling the quality of its earnings poor given its low margins and ongoing capitalisation issues, saying the business should perform better than it consistently has.

August's guidance downgrade dents confidence again

Pendal Group detailed a further downgrade to FY27 guidance, driven by an unexpected step-up in transformation-related operating expenditure and softer project demand across the Landfills and Industrial Services divisions. Free cash flow turned positive in FY26 and is expected to grow strongly in FY27, but the result still missed on lower earnings, higher capital expenditure and an unbudgeted $20 million software payment, which Pendal said pushed the company's promised shift from an investment phase to a cash harvesting phase out by a year and dented market confidence.

Then a takeover bid arrives

Days after that guidance reset, EQT Infrastructure lodged a non-binding proposal to acquire Cleanaway for $3.13 a share in cash, a 32 percent premium valuing the company at approximately $9.4 billion including debt, with the board agreeing to support the bid if it clears an exclusive due diligence period. Pendal noted Cleanaway's network of waste infrastructure assets had been speculated as a takeover target for some time, particularly after sustained share price underperformance driven by the serial earnings downgrades.

First Samuel says the price is still too low

First Samuel, Cleanaway's largest portfolio position, argued the offer undervalues the business, putting its own valuation at $3.35 a share and arguing an acquirer should pay a premium for control on top of that figure, not below it.

We believe the bid undervalues the business; our valuation is $3.35 per share, and an acquirer should pay a premium for control on top of that.

— First Samuel, Article, August 2026

First Samuel argued markets are efficient at pricing near-term earnings changes but far less consistent at distinguishing temporary weakness from permanent impairment, the exact distinction it believes matters here, and flagged the possibility the offer attracts additional interest. Pengana Capital Group had already added a new position in July, before the bid emerged, arguing Cleanaway operates in a structurally growing recycling market that has finally started converting into the kind of cash flow the fund looks for.

What happens next looks likely to hinge on whether EQT's due diligence period concludes with a firm offer at $3.13 a share or higher, whether First Samuel's push for a higher price draws a bump or a rival bidder, and whether the delayed shift to a cash-harvesting phase proves to be a one-year delay, as Pendal characterised it, or something more persistent.