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Waste Connections aquires assets in the wake of the Republic/Allied merger.
March 1, 2009
5 Min Read
Chris Carlson ([email protected])
Waste Connections, Folsom, Calif., has agreed to purchase assets from Phoenix-based Republic Services that had to be divested following Republic's merger with Allied Waste. Waste Connections paid approximately $310 million for the assets, which the company estimates will generate revenues of nearly $110 million each year and roughly $46 million in EBIDTA.
The agreement is expected to close during second-quarter 2009 and includes six municipal solid waste (MSW) landfills, three collection operations and three transfer stations in seven markets, including Southern California; Charlotte, N.C.; Denver; Flint, Mich.; Greenville/Spartanburg, S.C.; Houston and Lubbock, Texas.
“This agreement represents the culmination of several months of effort to position Waste Connections for this attractive opportunity,” said Ronald J. Mittelstaedt, chairman and CEO of Waste Connections, in a press release. “It's extremely rare to acquire six highvolume MSW landfills in a single transaction. We remain actively engaged in negotiations with Republic Services on additional required [U.S.] Department of Justice divestitures.”
The assets acquired include:
The Chiquita Canyon Landfill in Southern California, which can receive an estimated 1,500 tons of municipal solid waste each day and 2,000 tons of special or industrial waste each day. Worthing Jackman, chief financial officer for Waste Connections, says the landfill complements the company's existing landfill in Avenal, Calif., and that capacity constraints in the market are expected to drive tipping fee increases over the next several years. For example, he explains, the largest landfill in that area, the Puente Hills Landfill, is scheduled to close in 2013, which will displace the nearly 10,000 tons of waste it receives each day.
The Front Range Landfill in Denver, which is adjacent a Waste Connections landfill in that market that has less than five years of capacity remaining. Denver is Waste Connections' only vertically integrated competitive market where the company's existing landfill has less than five years of capacity remaining. Front Range was recently granted an expansion and has more than 80 years of capacity remaining at its projected flow of 1,500 tons per day.
The company acquired a 35-route commercial collection operation in Houston, as well as the Seabreeze Landfill and a smaller collection operation south of Houston in Angleton, Texas. The landfill receives a projected 2,000 tons each day, primarily from Brazoria County and Harris County.
In Lubbock, Texas, Waste Connections acquired a seven-route commercial collection operation, which represents a 50 percent increase of its existing operations in the area. Given the market overlap, Jackman says, the company may have to sell its existing operations in that market to address any concerns of the U.S. Department of Justice.
An integrated commercial collection, transfer and municipal solid waste landfill operation in Greenville/Spartanburg, S.C. The transfer station is between the two cities and feeds the Anderson Regional Landfill, which receives a projected 800 tons of waste each day.
A commercial collection and transfer operation, and a municipal solid waste landfill in Charlotte, N.C., as well as the Peachland collection operation, which is southeast of the city. The landfill acquired, the Anson County Landfill, is projected to receive 1,000 tons of solid waste each day.
In Flint, Mich., the company acquired the Brent Run Landfill, which is projected to receive 2,000 tons of trash each day and has the shortest permitted capacity of all of the landfills acquired with nearly 10 years remaining.
Jackman says the company remains in discussions with Republic to potentially acquire more divested assets. He also adds that the new markets the company will enter after these acquisitions will expand the list of potential acquisition candidates that fit the company's strategic profile.
“Away from Republic, the current pace of acquisition dialogue within our existing footprint suggests we should comfortably close our traditional $40 to $60 million of acquired annualized revenue during 2009,” Jackman says. “And the new markets we will enter with the announced [Republic Services] transaction expand the list of potential acquisition candidates that fit our strategic profile.” Waste Connections reported a net income of $27.9 million on revenues of $259.6 million for fourth-quarter 2008, both increases from a net income of $22.8 million on revenues of $247.8 million for the same quarter in 2007. For the year, the company reported a net income of $105.6 million on revenues of $1.05 billion, also increases from a net income of $99.1 million on revenues of $958.5 million in 2007.
Jackman says the company remains in discussions with Republic to potentially acquire more divested assets. He also adds that the new markets the company will enter after these acquisitions will expand the list of potential acquisition candidates that fit the company's strategic profile.
“Away from Republic, the current pace of acquisition dialogue within our existing footprint suggests we should comfortably close our traditional $40 to $60 million of acquired annualized revenue during 2009,” Jackman says. “And the new markets we will enter with the announced [Republic Services] transaction expand the list of potential acquisition candidates that fit our strategic profile.” Waste Connections reported a net income of $27.9 million on revenues of $259.6 million for fourth-quarter 2008, both increases from a net income of $22.8 million on revenues of $247.8 million for the same quarter in 2007. For the year, the company reported a net income of $105.6 million on revenues of $1.05 billion, also increases from a net income of $99.1 million on revenues of $958.5 million in 2007.
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