Environmental cleanup services company Clean Harbors (NYSE:CLH) inked a $1.25 billion deal on Monday to take over Safety-Kleen in an effort to bolster its industrial offerings.
Safety-Kleen is the largest re-refiner and recycler of used oil in North America and is privately owned by a group of investors led by Dallas-based Highland Capital Management.
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“Safety-Kleen is a recognized leader in the environmental services field with a corporate heritage that dates back nearly 50 years with a strong service culture,” Clean Harbors CEO Alan McKim said in a statement.
Last year Safety-Kleen said it managed hazardous and non-hazardous materials equaling about 680,000 55-gallon drums, generating revenue of $1.3 billion and adjusted EBITDA of $161 million.
Clean Harbors said it anticipates the acquisition immediately adding to its bottom line, excluding acquisition costs. The deal is expected to close by the end of the year.
Clean Harbors said it believes the acquisition will help it penetrate the small quantity waste generator market and also broaden its capabilities to include waste oil. At the same time, Clean Harbors said it envisions “substantial cross-selling opportunities” at Safety-Kleen’s more than 200,000 customer locations.
“Safety-Kleen's customers will benefit from access to Clean Harbors' expansive suite of environmental, energy and industrial services,” said Safety-Kleen CEO Bob Craycraft.
To pay for the deal, Clean Harbors said it has received a financing commitment from Goldman Sachs (NYSE:GS), but the company also said it is considering other options, including a combination of existing cash, debt and equity.
The two companies have a history of deal making, with Clean Harbors buying Safety-Kleen’s chemical services business in 2002 for $310 million.
Shares of Clean Harbors were inactive on Monday as U.S. equity markets were closed due to Hurricane Sandy. For the year the company’s shares have slumped just over 22%.
Credit Suisse (NYSE:CS) and Morgan Stanley (NYSE:MS) advised Safety-Kleen on the transaction.