Republic Services (RSG) definitively agreed to pay $48 a share, or about $1.5 billion, for US Ecology (ECOL), bringing together two major environmental services companies.
The deal, valued at $2.2 billion including debt, vertically integrates and expands Phoenix-based Republic Services, meeting "customers' demand for a single source partner with a recognized track record for sustainability," the companies said in a statement.
US Ecology, Boise, Idaho, provides treatment, recycling and disposal services for hazardous, non-hazardous and specialty waste.
At last check US Ecology shares were trading up 68% at $47.45. Republic Services shares were trading up 0.9% at $128.03.
For the first nine months of 2021, US Ecology swung to a profit of 6 cents a share from a loss of $9.54 a share in the year-earlier period. On an adjusted basis, the company posted profit of 4 cents a share compared with earnings of 29 cents a year earlier.
Revenue for the nine months grew 4.9% to $726.6 million from $692.8 million. For the trailing 12 months ended Sept. 30, US Ecology posted revenue of $968 million.
In its third-quarter earnings statement, US Ecology cut its earnings outlook for the full year. saying industrial production was still below prepandemic levels.
Despite supply-chain, transportation and labor challenges, US Ecology said trends across its operations were positive, its pipeline was strengthening, "our competitive position remains as strong as ever, and we continue to leverage our network of facilities and service offerings to win business. ..."
Adding US Ecology to Republic creates "a national platform of difficult-to-replicate assets and talent to enable Republic to provide customers with environmental solutions from collection through disposal," the companies said.
The acquisition brings to Republic nine specialty-waste landfills with five hazardous waste landfills; 16 federally permitted waste treatment, storage and disposal facilities; seven wastewater-treatment facilities, and more than 80 environmental-services field locations, the companies said.
Republic expects the deal to immediately add to adjusted earnings. It expects the deal to generate $40 million of cost synergies within three years.
The deal has no financing condition. Republic said it expected to finance the deal using current and new sources of debt. It expects to retain a "solid investment-grade credit rating" after the deal closes.
Both companies' boards have approved the terms.
Republic and US Ecology expect to close the deal by the end of the second quarter, subject to conditions including regulatory clearances and approval by US Ecology holders.
