Clean Harbors has announced it has entered into a definitive agreement with Gryphon Investors to acquire HEPACO, a leading provider of specialized environmental and emergency response services in the Eastern United States, for $400 million in cash.
The deal is expected to close in the first half of 2024, subject to regulatory approval and other customary closing conditions.
Based in Charlotte, North Carolina, HEPACO has over 2,000 customers, which it services through more than 40 regional locations in 17 states. Its primary offerings include field services, environmental remediation and emergency response services. And on an adjusted basis, HEPACO is expected to generate a full-year 2023 EBITDA of about $36 million on $270 million of revenues.
Clean Harbors expects the deal to generate cost synergies of approximately $20 million after the first full year of operations, which equates to a post-synergy acquisition multiple of 7.1 times. And Clean Harbors expects to fund the acquisition through available cash and some additional debt financing issuance.
The key strategic benefits of the transaction for Clean Harbors include:
— The complementary product offerings that increase the scale and capabilities of Clean Harbors’ Field Services business
— The synergies in areas like subcontracting, branch network, asset rentals, transportation and procurement
— The expansion of its rail and marine service capabilities through the addition of HEPACO’s highly trained people and specialized equipment
— An opportunity to drive additional volumes of waste to Clean Harbors’ network of disposal and recycling facilities
— Meaningful cross-selling opportunities, particularly for industrial services and disposal of hazardous waste
— The opportunity to introduce new customers to the Clean Harbors and Safety-Kleen brands, and to deepen relationships with existing customers.
HEPACO employs about 1,000 people, operates a fleet of more than 900 vehicles and serves a diverse set of industry verticals. And in addition to the company’s regional operations spanning 17 states, HEPACO’s National Operations center provides 24-hour coverage across the continental U.S. through a network of contractors.
For this deal, Davis, Malm & D’Agostine is serving as legal counsel to Clean Harbors. And for HEPACO, Piper Sandler Companies and Houlihan Lokey serve as financial advisors, Kirkland & Ellis LLP, and Moore & Van Allen PLLC serve as legal counsel.
KEY QUOTES:
“HEPACO is a recognized leader in Field Services and its addition will accelerate the growth of our Environmental Services segment. When providing emergency services, scale and rapid response capabilities are critical. HEPACO’s geographic footprint, trained personnel and equipment fleet will enhance our existing business, enabling us to gain efficiencies and offer an even broader range of solutions. Field Services and emergency response have been a hallmark of Clean Harbors since our founding in 1980. We are confident that we can deliver strong shareholder value through this transaction in the years ahead.”
– Eric Gerstenberg, Co-Chief Executive Officer of Clean Harbors
“The acquisition of HEPACO aligns with our Vision 2027 long-term strategic plan for driving growth through a continued focus on value creation across all areas of our business. We see an excellent cultural fit with our two organizations that should help ensure the success of this acquisition. HEPACO has demonstrated a commitment to safety, environmental compliance and service excellence that matches our principles in these areas. We look forward to welcoming HEPACO’s talented team to the Clean Harbors family.”
– Mike Battles, Co-Chief Executive Officer of Clean Harbors
“Given its leading position in environmental and field services, as well as a 40-year history in emergency response, Clean Harbors is an ideal fit for HEPACO. Clean Harbors will provide HEPACO’s customers with far greater resources and access to North America’s largest network of permitted disposal and recycling assets. This transaction also will offer enhanced career opportunities for HEPACO employees.”
– Robb Schreck, Chief Executive Officer of HEPACO
