Medical waste firm Stericycle Inc. has agreed to purchase information destruction firm Shred-it International for $2.3 billion.

The Lake Forest, Ill.-based Stericycle said the purchase strengthens the company’s growth opportunities by providing an additional business-to-business compliance solution, taking advantage of the company’s existing core capabilities and expanding its global reach, according to a news release.

Shred-it, based in Oakville, Ontario, provides secure information destruction services to more than 400,000 customer locations in 15 countries. The company has pro forma revenue for the 12-month period ending in March at $726 million. Upon closing, Shred-it will become a wholly owned subsidiary of Stericycle.

"Shred-it is the recognized global leader in secure information destruction and this acquisition marks another exciting milestone for Stericycle," said Charlie Alutto, Stericycle president and CEO. "By combining Shred-it with our business-to-business compliance solutions, we are providing the marketplace with a broader portfolio of services. Stericycle has a lot of experience selecting and integrating acquisitions, and we believe that Shred-it represents one of the most attractive opportunities for our business that we have ever seen.”

Said Dave Samuel, Shred-it chairman, "The acquisition by Stericycle will allow continued innovation and expanded service offerings to a broader range of customers across the globe."

Stericycle said other strategic benefits of the acquisition are that it expands on its operational infrastructure and capitalizes on route-based logistics expertise, and creates a new platform in a highly fragmented sector.

Financial benefits in the cash deal include about $150 million in expected tax benefits; improved earnings before interest, taxes, depreciation and amortization (EBITDA) and earnings per share (EPS) through a combination of margin expansion and debt repayment; and expected cost synergies of at least $20 million to $30 million by 2018, with the potential for revenue synergies eventually.

The combined company expects to have more than $1 billion in EBITDA in 2016.

Stericycle expects the close the purchase in the fourth quarter.

Michael E. Hoffman, managing director for Stifel, Nicolaus & Co. Inc., said in his commentary on the deal: “Shred-it’s document destruction business overlaps well (almost 50 percent) with the (Stericycle) customers within its medical waste, hazardous waste and communication solutions segments. In addition, the documentation destruction market’s key characteristics–regulatory driven, highly fragmented and grounded in routed-based logistics–plays in well into (Stericycle’s operating strengths.”

He noted that the global document destruction market is estimated at $13.4 billion, with North America representing about 30 percent of that total. Shred-it merged with Cintas Document Destruction segment in May 2014.