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Saturday, February 4, 2023

US Ecology (NASDAQ: ECOL) to be Acquired by Republic Services (NYSE: RSG)

US Ecology, Inc. (NASDAQ: ECOL) disclosed that it has inked an agreement with Republic Services, Inc. (NYSE: RSG). As per the agreement, Republic Services will buy all outstanding shares of US Ecology for $48 per share in cash. It signifies a total value of around $2.2 billion including net debt of nearly $0.7 billion.

Republic Services disclosed that the acquisition of US Ecology will allow Republic Services to offer one of the most complete sets of product offerings to customers across the environmental services space and create substantial value for its stakeholders. The company believed that this strategic acquisition would grow its geographic footprint across the U.S. and Canada and offers vertical integration capabilities for its environmental solutions business.

Furthermore, Republic will be able to offer customers environmental solutions from collection to disposal thanks to the acquisition of US Ecology, which will bring a national platform of difficult-to-replicate assets and personnel. This includes the addition of nine specialty waste landfills, five toxic waste landfills, 16 RCRA-permitted TSDFs, seven wastewater systems, and more than 80 environmental services field locations, such as treatment and recycling centers.

Additionally, Republic will be able to use its core strengths, unified operating model, and digital investment to boost profitability across the new portfolio of assets as a result of the acquisition. The purchase is likely to be profitable to Republic’s adjusted earnings and free cash flow. Within three years of the transaction, Republic expects to save about $40 million in cost savings, resulting in double-digit returns.

Republic Services plans to fund the deal with both current and new financing. Republic Services plans to maintain a good balance sheet and investment-grade credit rating after the deal is completed. Within 18 months after finalizing the deal, the Company expects net debt-to-EBITDA to fall below 3x, as stated in its credit agreement.

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