Date: October 29, 2012
Source: Clean Harbors, Inc.
Clean Harbors (Norwell, MA) is buying Safety-Kleen Inc. (Plano, TX) for $1.25 billion. "This acquisition is a landmark achievement for Clean Harbors that we believe will build significant long-term value for our shareholders," said Clean Harbors CEO Alan S. McKim. The deal combines Safety-Kleen's oil recycling and industrial parts cleaning business with Clean Harbors' more diversified environmental, energy and industrial services that will broaden its offerings and ability to meet customers' sustainability goals. Clean Harbors has a long history with Safety-Kleen, including its purchase of Safety-Kleen's chemical services division in 2002. In 2010 Safety-Kleen rejected an offer from Clean Harbors to buy them for $718 million. In recent years Safety-Kleen has been a customer of Clean Harbors', and to some extent a competitor as well. In August, Safety-Kleen filed for a $400 million initial public offering which was later postponed due to unfavorable market conditions. At the time, some believed it was meant to showcase the company for a possible sale. Dallas-based Highland Capital Management is the largest shareholder with 20 million shares or 39.3 percent of the company.
Clean Harbors employs about 8,900 workers, while Safety-Kleen employs about 4,300. McKim said there will be only minor job cuts, and the combined companies will save some $20 million annually.
Though it is still widely known for its parts-cleaning systems, Safety-Kleen has expanded into industrial waste handling and oil recycling, operating used-oil refineries in Ontario and East Chicago, IL. Revenue and profits have grown significantly in each of the last three years. For the 16 weeks ended April 16, Safety-Kleen's profit increased 61% to $17.2 million while sales rose 19% to $426.6 million, according to its regulatory filing.
In a news release, Clean Harbors said the purchase will allow it to, among other things, capitalize on the growing demand for recycled products including refined oil; combine the sales forces to maximize cross-selling opportunities; and increase cash flow.
October 29, 2012
Clean Harbors Signs Definitive Agreement to Acquire Safety-Kleen - A Leading Provider of Environmental and Recycling Services
$1.25 Billion Transaction Will Broaden Clean Harbors Waste Treatment Capabilities and Drive Significant Waste Volumes into Its Disposal Network; Company to Hold Conference Call Today at 9:00 a.m. ET
Clean Harbors, Inc. ("Clean Harbors") (NYSE:CLH), the leading provider of environmental, energy and industrial services throughout North America, today announced it has signed a definitive agreement to acquire Safety-Kleen, Inc. ("Safety-Kleen"), the largest re-refiner and recycler of used oil in North America and a leading provider of parts cleaning and environmental services. Under the terms of the agreement, Clean Harbors will purchase Safety-Kleen in an all-cash transaction valued at $1.25 billion. The acquisition is subject to approval by U.S. and Canadian regulators, as well as other customary closing conditions. The transaction is expected to be completed by year-end.
Based on the current operating and anticipated future performance of Safety-Kleen, Clean Harbors expects the acquisition will be immediately accretive, excluding one-time fees and acquisition-related expenses. The Company has received a financing commitment from Goldman Sachs Bank USA, but is currently considering several financing options for the transaction that may include a combination of existing cash, debt and equity.
The transaction will enable Clean Harbors to:
Penetrate the small quantity waste generator market
Broaden its waste treatment capabilities to include re-refining waste oil and expanded solvent recycling capabilities
Drive substantial increase in waste volumes into its existing waste disposal treatment network
Capitalize on the growing demand for recycled products including re-refined oil
Enhance its commitment to sustainability
Leverage the combined sales forces to maximize cross-selling opportunities
Add an immediately accretive business to accelerate growth
Leverage operating efficiencies through the combined company
Add to its strong cash flow generation
"This acquisition is a landmark achievement for Clean Harbors that we believe will build significant long-term value for our shareholders," said Alan S. McKim, Chairman and Chief Executive Officer. "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. We have the benefit of a long and positive relationship with Safety-Kleen as a result of our acquisition of its Chemical Services Division a decade ago. Safety-Kleen has been a large customer of our environmental services business. The addition of its entire organization aligns perfectly with our acquisition strategy of expanding our Environmental Services business in North America. Safety-Kleen is the largest collector of waste from the small quantity generator market and the leader in re-refining used oil in North America."
"Adding Safety-Kleen's re-refining and recycling capabilities to our current offerings will enhance the sustainability options available to our existing customers and significantly broaden the range of services we can offer customers of both companies," McKim said. "Safety-Kleen services over 200,000 customer locations, and we envision substantial cross-selling opportunities with its extensive customer base. These Safety-Kleen customers will now have direct access to our industry-leading network of disposal facilities."
Bob Craycraft, Safety-Kleen's President and CEO, said, "We believe this transaction represents an opportunity to combine two truly dynamic organizations. Clean Harbors' history of innovation and commitment to sustainability mirrors our philosophy of delivering our customers the latest in re-refining, recycling and hazardous waste management, as we continually upgrade the environmental services we offer. Safety-Kleen's talented group of employees are joining an exceptional, well-managed company with a track record of success. At the same time, Safety-Kleen's customers will benefit from access to Clean Harbors' expansive suite of environmental, energy and industrial services."
With more than 200 locations throughout North America, Safety-Kleen services commercial and industrial customers in the U.S., Canada and Puerto Rico. Safety-Kleen currently employs approximately 4,200 employees and operates a sizeable service fleet of more than 2,300 vehicles and 1,000 rail cars. Safety-Kleen's portfolio of assets include the largest oil re-refinery in the world at its East Chicago, Indiana location and the largest re-refinery in Canada at its Breslau, Ontario location. Currently, the company collects approximately 200 million gallons of used oil annually, the majority of which it returns to the marketplace as reusable motor oil. In 2011, Safety-Kleen managed hazardous and non-hazardous waste volumes equivalent to approximately 680,000 55-gallon drums. Safety-Kleen generated revenues of $1.3 billion and adjusted EBITDA of $161 million in 2011.
McKim said, "Safety-Kleen's professional approach toward compliance, health and safety excellence, and commitment to customer service is closely aligned with Clean Harbors' devotion to those very same principles. Safety-Kleen is led by a first-class management team and we are excited to work together with Bob and his team to complete this merger. We are confident that working together we can capture substantial synergies between our two organizations and the significant upside potential of the combined company."
"Looking ahead, our focus will be on gaining the necessary approvals, planning our integration and completing the acquisition by year-end. We appreciate the strength and intrinsic value of the Safety-Kleen brand. Therefore, we intend to maintain its brand going forward and operate its network of branch locations as a subsidiary. We look forward to welcoming Safety-Kleen's employees into the Clean Harbors family. This transformative merger of two great companies will further reinforce our position as the premier provider of environmental, energy and industrial services in North America," McKim concluded.
Davis, Malm & D'Agostine served as legal counsel to Clean Harbors. Credit Suisse served as lead financial advisor to Safety-Kleen. Morgan Stanley and Houlihan Lokey provided additional financial advisory support. Skadden, Arps, Slate, Meagher & Flom served as legal counsel to Safety-Kleen.
Clean Harbors will be announcing its third-quarter results on its regularly scheduled date, which as previously announced will be Wednesday, November 7. There will be no update on its quarterly financial results provided in conjunction with today's announcement.
Conference Call Information
Management will hold a conference call today to discuss the Safety-Kleen transaction at 9:00 a.m. ET. Those who wish to listen to the webcast of the call and view the accompanying slides should visit the Investor Relations section of the Company's website at www.cleanharbors.com. The live call also can be accessed by dialing 201.689.8881 or 877.709.8155 prior to the start of the call. If you are unable to listen to the live call, the webcast will be archived on the Company's website.
Safety-Kleen is a leading North American used oil recycling and re-refining, parts cleaning and environmental solutions company, with approximately 4,200 employees serving more than 200,000 customer locations in the United States, Canada and Puerto Rico. Safety-Kleen provides a broad set of environmentally-responsible products and services that keep North American businesses in balance with the environment. Safety-Kleen is owned by a group of investors including Highland Capital Management, L.P. of Dallas, Texas, its largest investor. For more information about the company, please visit www.safety-kleen.com.
About Clean Harbors
Clean Harbors is the leading provider of environmental, energy and industrial services throughout North America. The Company serves more than 60,000 customers, including a majority of the Fortune 500 companies, thousands of smaller private entities and numerous federal, state, provincial and local governmental agencies.
Headquartered in Norwell, Massachusetts, Clean Harbors has more than 200 locations, including over 50 waste management facilities, throughout North America in 38 U.S. states, seven Canadian provinces, Mexico and Puerto Rico. For more information, visit www.cleanharbors.com.
Safe Harbor Statement
Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. Such statements may include, but are not limited to, statements about the Company's ability to close its proposed acquisition of Safety-Kleen, its ability to raise the capital necessary to complete the transaction, expected synergies from the transaction, and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors' management as of this date only and are subject to certain risks and uncertainties that could cause actual results to differ materially, including, without limitation, those items identified as"risk factors" in the Company's most recently filed Form 10-K and Form 10-Q. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements other than through its various filings with the Securities and Exchange Commission, which may be viewed in the "Investors" section of the Company's website at www.cleanharbors.com.
For more information, contact:
Clean Harbors, Inc.
James M. Rutledge, 781-792-5100
Vice Chairman, President and Chief Operating Officer
Sharon Merrill Associates
Jim Buckley, 617-542-5300
Executive Vice President