Republic Services Set to Acquire US Ecology for $2.2B

Waste disposal company Republic Services, Inc. (NYSE: RSG) will acquire environmental solutions provider US Ecology, Inc. (Nasdaq-GS: ECOL) for $2.2 billion in a deal that will allow Republic to offer customers with environmental solutions like “treatment, recycling, hazardous and non-hazardous waste disposal and specialty waste.”

Pursuant to the Feb. 9 deal, Republic Services will acquire the outstanding shares of US Ecology for $48 per share cash, for a total value of $2.2 billion, which also includes approximately $700 million in debt.

According to the filings, this will vertically integrate and expand Republic’s environmental solutions offerings. Specifically, US Ecology will “add a national platform of difficult-to-replicate assets and talent” and allow Republic to provide customers with environmental solutions ranging from collection to disposal. For example, this will add nine specialty waste landfills, including five hazardous waste landfills, 16 RCRA permitted TSDFs, seven wastewater treatment facilities, and more than 80 environmental field locations like treatment and recycling centers. As a result, this will allow customers with various recycling and waste needs to use the new combined company as a single partner for their different needs. The transaction will fast-track growth opportunities, such as through cross-selling opportunities.

As noted in the filing, its revenue for the past 12 months ending on September 30, 2021 was $968 million and adjusted EBITDA was $156 million. It is expected to provide $40 million synergies within three years and to be immediately accretive to adjusted earnings and free cost flows.

The transaction “enables Republic Services to provide customers with one of the most complete set of product offerings across the environmental services space and creates significant value for our stakeholders,” Jon Vander Ark, president and chief executive officer at Republic Services, said in a press release. “This strategic acquisition expands our geographic footprint across the U.S. and Canada and provides vertical integration capabilities for our environmental solutions business.”

“The combination of our companies provides a platform to accelerate our common strategy of providing a full complement of environmental solutions to better our world,” Jeff Feeler, chairman, chief executive officer and president at US Ecology, said in a statement. “In addition, this transaction showcases the value of US Ecology’s business, providing our stockholders with attractive and certain value, and brings together a network of assets with extensive environmental solutions expertise to handle customers’ most challenging and complex needs.

The transaction will be financed by Republic Services via existing and new sources of debt. The reverse triangular merger is subject to customary closing conditions and is expected to close in Q2 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.

Before the announcement, Republic’s stock was valued at $126.95; when it was announced on Feb. 9, the stock was valued at $127.64; and more than a week later the stock was valued at $117.54 on Feb. 18.

Similarly, before the announcement, US Ecology’s stock was valued at $28.17; when it was announced, stocks closed at $47.25; and about a week later on Feb. 18, the stocks closed at $47.05.

Republic Services previously merged with Allied Waste Industries in 2008 for a combined enterprise value of more than $20 billion. According to its 2021 fourth quarter and full year results, Republic invested $1.06 billion in acquisitions in 2021, or $1.02 billion with net divestitures.