Scotland is introducing the UK’s first deposit return scheme for drinks bottles and cans, with Biffa PLC (LSE:BIFF) winning the contract to provide collection, counting and recycling services.
The Scottish deposit return scheme is scheduled to start on 16 August 2023, with a 20p deposit required for all drinks containers up to three litres.
Providing the logistical services for the scheme under a 10-year contract, Biffa will collection bottles and cans from an estimated 30,000 corner shops, supermarkets and other hospitality locations across the country as well as building and operation of three counting centres.
Biffa, which received a potential takeover bid last month and is in discussions with HMRC regarding a landfill tax enquiry relating to the potential misclassification of waste across the industry, has committed to investing £80mln in the project, including in the construction of the counting centres.
Circularity Scotland Ltd (CSL) is the appointed scheme administrator, working on behalf of drinks producers, retailers and hospitality venues.
Biffa said it is expecting a late-2024 start date for similar schemes in England, Wales and Northern Ireland.
Analysts at broker Peel Hunt said the contract highlights “Biffa’s status as a leading player in the UK, which is a major attraction to a bidder”.
With Biffa having received an approach about a potential 445p takeover bid, the analysts noted that the shares trade at an 18% discount to the potential offer price, "which to us seems a good risk/reward trade, despite the uncertainties most notably relating to the HMRC case".