Dive brief:

  • Republic Services has acquired ACV Enviro based in New Jersey of private equity firm Kinderhook Industries, marking a considerable expansion of its environmental services business. Financial terms were not disclosed and Kinderhook declined to comment.
  • “We are delighted to welcome ACV to the Republic Services team,” said Donna Egan, director of external communications, in a statement confirming the transaction. “The growth of the environmental solutions portion of our business allows Republic to leverage core capabilities to meet growing customer demand, enhance our positive impact on the environment and help our customers achieve their goals. sustainable development. “
  • The ACV acquisition has more than 900 employees; two hazardous waste transfer, storage and disposal facilities (TSDF); nine 10-day transfer facilities and 26 service centers in the Northeast and Midwest, according to financial advisor Brown Gibbons Lang & Co. The vertically integrated company focuses on hazardous and non-hazardous waste, including a range sanitation and emergency response services.

Dive overview:

Republic leaders have foreshadowed their planned expansion of environmental services for months on end during results calls and investor events, and this deal is an important step in that direction.

“These are companies or service lines in which we have been present for long periods of time in a very progressive way,” said CEO Jon Vander Ark. during the company’s August earnings call. “Customers have asked us to play a better and bigger role as they seek to consolidate their supply base around a reduced number of suppliers who may have an excellent track record in security, a digital interface and good sustainability results. “

Republic sees this as a potentially addressable $ 20 billion market and has pursued it for years through smaller acquisitions and entirely new ventures, according to comments from company executives during the WasteExpo investor summit in June. During this event, Business Development Director Brian Bales described this market as “still quite fragmented, which gives us many opportunities to grow both organically and through mergers and acquisitions.”

Republic’s existing environmental services division generated revenue of $ 191.7 million for 2019, followed by a drop to $ 127.7 million last year due to the effects of the pandemic. Revenues from environmental services in the first half of 2021 amounted to $ 59.3 million. Chief Financial Officer Brian DelGhiaccio recently described this existing business represents approximately 30% in the “upstream oil and gas sector”, with 70% in the “downstream petrochemicals and broader industrial manufacturing sectors”. Republic expanded to the old zone by acquiring Tervita in 2014, and it has since developed this segment in many oil basins, but it has been affected by broader declines in this market.

Of the society the last quarterly deposit described revenues from environmental services as primarily comprising “fees we charge for the disposal of non-hazardous solids and liquids and plant services, such as transportation and logistics”, with materials derived from “day-to-day operations of the facilities industrial, petrochemical and refining industries, including maintenance, plant overhauls and capital projects ”in addition to oil and gas exploration.

ACV’s vertically integrated portfolio, with TSDF RCRA Part B in New Jersey and Pennsylvania, provides Republic a solid platform to develop new and existing businesses in this area. Since Republic already manages special waste for industrial and industrial customers, this is seen as a logical extension. According to Kinderhook, ACV serves a range of commercial and government customers, including “utilities, refineries, power plants and chemical manufacturing plants, in addition to academic and medical institutions.” ACV’s 2020 revenue was recently announced at $ 200 million by Waste Today.

“This is an exceptional result for Kindergarten, ACV, and its employees. The ACV team, led by Andy Shackett, executed on an aggressive growth strategy to build a highly strategic and vertically integrated environmental solutions business. We are very proud of the ACV achievements of the team and expect the company to continue to be successful in the future ”, noted Rob Michalik, general manager of Kindergarten, in a report.

Several ACV Environment Employees posted photos of Republic welcome banners at ACV facilities on Linkedin to mark the occasion yesterday. Shackett, who became CEO of ACV in 2017 after working at Clean Harbors, is expected to stay with Republic and lead a new business segment. which includes ACV assets, according to sources. The Republic refused to confirm this information, and Shackett could not be reached for comment.

The original story of ACV dates back to 1976, but its current form comes from a pair of Kindergarten acquisitions in 2015 – Clean Venture Cycle Chem and Allstate Power Vac. The ACV Environment brand launched in 2016, growing with the acquisitions of Walker Industrial Services in 2017 and CTR Industries in 2018.

This is the second recent transaction between Republic and Kindergarten, following the sales made to solid waste management companies in the private equity firm’s portfolio in connection with the acquisition of Santek Waste Services.

While large North American solid waste management companies were previously more involved in hazardous waste or environmental services, the situation has changed over the years. Waste Management and Waste Connections also deal with waste oil and gas, but neither currently has a significant presence in other environmental services business lines. GFL Environmental manages liquid waste, as well as infrastructure and soil remediation services, but this represents a smaller and smaller share of its business compared to solid waste.

Republic’s progress in this area now puts it in competition for customers and potential acquisition targets with a wider range of other companies. Prior to the deal, Republic said it spent $ 567 million on acquisitions through the second quarter. Vander Ark predicted that figure would easily exceed $ 600 million and predicted “a very good year” in business.