Republic Services Rolls into 2022 with $2.2 Billion US Ecology Acquisition

The first month of 2022 is already on the books, with consolidations rolling along a route that will further shape the waste and recycling landscape.

Following the January acquisition of La Salle, Ill.-based River Waste City Services, Republic Services has reached an agreement to purchase Ecology in a $2.2 billion cash transaction, or $48 per share including net debt of approximately $0.7 billion. The company plans to finance the deal with existing and new sources of debt.

Jon Vander Ark, Republic Services CEO and president, commented that "this strategic acquisition expands our geographic footprint across the U.S. and Canada and provides vertical integration capabilities for our environmental solutions business."

Sources close to the situation told Bloomberg on Tuesday that a deal could come to fruition as early as this week. Details of the acquisition were confirmed Wednesday morning.

Boise, Id.-based US Ecology has a market value of about $887 million. The company has a 12-month revenue of $968 million and an adjusted EBITDA of $156 million, as of Sept. 30, 2021. US Ecology's services span the treatment, recycling and disposal of hazardous, non-hazardous and specialty waste.

Market value for Phoenix-based Republic Services, the second-largest company in the industry, is about $40 billion.

The integration of US Ecology allows Republic Services to enhance collection and transfer in its environmental solutions line of business, notably "a national platform of difficult-to-replace assets and talent." Assets that will become part of Republic's portfolio include nine specialty waste landfills with five hazardous waste landfills, 16 RCRA permitted TSDFs, seven wastewater treatment facilities and more than 80 environmental services field locations including treatment and recycling centers.

The company also cited the ability to "leverage its core capabilities, standardized operating model and investment in technology to enhance profitability," once US Ecology has been assimilated.

An estimated $40 million in cost synergies is expected within three years of the acquisition, with double-digit returns. Republic expects the combined company adjusted free cash flow conversion to be at least 47 percent by 2024, it stated.

Growth opportunities include the amplification of Republic's capabilities, which will allow for "outsized" revenue growth. The acquisition is anticipated to be the catalyst for cross-selling opportunities. Republic stated that the combined business allows customers the option to choose a single partner for recycling, solid waste, special waste, hazardous waste, container rental as well as field services.

Republic also stated that this particular purchase provides it a "platform to pursue additional tuck-in acquisitions in the highly fragmented environmental solutions business."

Jeff Feeler, chairman, CEO and president, US Ecology, said in a statement, that "2022 marks US Ecology's 70^th year of operations, built around providing environmental solutions that protect human health and the environment. 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. 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."