Waste Wheel of Fortune

The sale of Houston-based WCA Waste Corp. to Macquarie Infrastructure Partners II could lead to some asset divestments. But whatever happens with WCA shouldn’t have much direct impact on the significant solid waste assets that are already on the block from Veolia Environmental Services, says one industry analyst.

Michael Hoffman, director of research for Memphis, Tenn.-based Wunderlich Securities Inc., elaborated on his thoughts about the potential scenarios for Veolia’s U.S. assets in an interview. Paris-based Veolia Environnement announced that its U.S. solid waste operations were for sale a few weeks before the WCA deal became public.

Hoffman has said that selling all the assets to one company would be the ideal strategy, and that Houston-based Waste Management Inc. would be the obvious buyer.  But if the operations did get sold individually, the potential suitors would vary widely depending on the assets.
If Veolia’s Wisconsin assets are sold separately, their previous owner, Phoenix-based Republic Services Inc., would be at the top of the list to buy, Hoffman says.

The Detroit operations of Veolia would be interesting, he says, because it would be the most challenging to sell, given the difficulties with the Detroit economy. Waste Connections Inc. of The Woodlands, Texas, would be the logical buyer because it operates a landfill in Michigan. “Waste Connections will buy that asset as cheaply as they can get it,” he says.

With the Florida assets, Hoffman says he believes Waste Management wouldn’t be allowed to hold on to them if they acquired all the U.S. Veolia assets, because the company already is so big in Florida. But he says Macquarie would take a look at it, as would Republic, southern-oriented companies Advanced Disposal Services Inc. of Jacksonville, Fla., and Waste Pro USA of Longwood, Fla., as well as Charlotte, N.C.-based Swisher Hygiene, with chairman H. Wayne Huizenga, who has long operated out of Florida.

“[There are] plenty of bidders in Florida,” Hoffman says.

Hoffman says Veolia should get at least $1.4 billion for its U.S. opoerations if it was sold together. But “it might have more value [selling] piecemeal, if you’re willing to take the time to do it.”