Waste disposal company Republic Services, Inc. (NYSE: RSG) to acquire environmental solutions provider US Ecology, Inc. (Nasdaq-GS: ECOL) for $2.2 billion in a deal which will allow Republic to offer its customers environmental solutions such as “treatment, recycling, disposal of hazardous and non-hazardous waste and special waste.
Pursuant to the February 9 agreement, Republic Services will acquire the outstanding shares of US Ecology for $48 per share in cash, for a total value of $2.2 billion, which also includes approximately $700 million in debt. .
According to filings, this will integrate and vertically expand Republic’s environmental solutions offerings. Specifically, US Ecology “will add a national platform of hard-to-replicate assets and talent” and enable Republic to provide its customers with environmental solutions from collection to disposal. For example, it will add nine specialized waste landfills, including five hazardous waste landfills, 16 RCRA-licensed TSDFs, seven sewage treatment facilities, and more than 80 environmental sites like treatment and recycling centers. As a result, this will allow customers with diverse recycling and waste needs to use the new combined company as a single partner for their different needs. The transaction will accelerate growth opportunities, including through cross-selling opportunities.
As noted in the filing, its revenue for the trailing 12 months ending September 30, 2021 was $968 million and adjusted EBITDA was $156 million. It should generate synergies of $40 million within three years and be immediately accretive to adjusted earnings and free cost streams.
The transaction “allows Republic Services to provide its customers with one of the most comprehensive product offerings in the environmental services space and creates significant value for our stakeholders,” said Jon Vander Ark, President and Chief direction of Republic Services, in a press release. Release. “This strategic acquisition expands our geographic footprint in the United States and Canada and provides vertical integration capabilities for our environmental solutions business.
“The combination of our companies provides a platform to accelerate our shared strategy of providing a full range of environmental solutions to improve our world,” said Jeff Feeler, CEO and president of US Ecology, in a statement. “Furthermore, this transaction showcases the value of US Ecology’s business, providing our shareholders with attractive and certain value, and brings together a network of assets with deep expertise in environmental solutions to meet the most pressing needs. difficult and most complex customers.
The transaction will be financed by Republic Services through existing and new sources of debt. The reverse triangular merger is subject to customary closing conditions and is expected to close in the second quarter of 2022.
US Ecology is represented by Dechert LLP and its financial advisors are Barclays Capital, Inc. and Houlihan Lokey Capital, Inc. Republic Services is represented by Davis Polk Wardwell LLP and its financial advisor is Moelis & Company LLC.
Prior to the announcement, Republic shares were valued at $126.95; when announced on February 9, the stock was valued at $127.64; and more than a week later, the stock was valued at $117.54 on February 18.
Similarly, prior to the announcement, US Ecology shares were valued at $28.17; when announced, shares closed at $47.25; and about a week later, on February 18, shares closed at $47.05.
Republic Services previously merged with Allied Waste Industries in 2008 for a combined enterprise value of over $20 billion. According to its fourth quarter and full year 2021 results, Republic invested $1.06 billion in acquisitions in 2021, or $1.02 billion with net divestments.