Waste disposal company Republic Services, Inc. (NYSE: RSG) has signed an agreement to acquire environmental solutions provider US Ecology, Inc. (NASDAQ: ECOL) for approximately $2.2 billion in cash.
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The deal, under which Republic Services will purchase all the shares of US Ecology for $48 per share, includes net debt of around $700 million.
Based out of Idaho, US Ecology offers solutions for the treatment, recycling and disposal of hazardous, non-hazardous and specialty waste. As of September 30, 2021, the company’s trailing-twelve-month revenue totaled $968 million and adjusted EBITDA amounted to $156 million.
Vander Ark, the President and CEO at Republic Services, said, “This strategic acquisition expands our geographic footprint across the U.S. and Canada and provides vertical integration capabilities for our environmental solutions business.”
Republic Services anticipates the acquisition to boost its adjusted earnings and free cash flow immediately. It also expects to record cost synergies of around $40 million within three years of the acquisition, which is likely to complete by the end of the second quarter.
The transaction will add seven wastewater treatment facilities, 16 RCRA permitted TSDFs, nine specialty waste landfills with five hazardous waste landfills, and more than 80 environmental services field locations to RSG’s portfolio.
About Republic Services
Arizona-based Republic Services provides non-hazardous solid waste collection, waste transfer, waste disposal, recycling, and environmental services.
Following the announcement, RSG stock gained 0.5% on Wednesday to close at $127.64. Meanwhile, ECOL stock closed 67.7% up.
Wall Street’s Take
Recently, Jefferies (NYSE: JEF) analyst Hamzah Mazari maintained a Buy rating on Republic Services with a price target of $152 (19.1% upside potential).
Overall, the stock has a Strong Buy consensus rating based on 4 Buys and 1 Hold. The average RSG price target of $145.20 implies 13.8% upside potential. Shares have gained 35.4% over the past year.
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