Clean Harbors Inc., an industrial and environmental service provider based in Norwell, Massachusetts, has announced a definitive agreement to acquire HydroChemPSC (HPC) from an affiliate of Littlejohn & Co. for $1.25 billion in an all-cash transaction. HPC is a U.S. provider of industrial cleaning, specialty maintenance and utility services based in Deer Park, Texas.
According to a news release from Clean Harbors, the acquisition, subject to regulatory approval and other customary closing conditions, is expected to close in 2021.
“In a business where brand equity, customer service and reputation for safety are important, HPC is a recognized leader with terrific assets that will enhance our environmental services capabilities, particularly in the higher-value areas of specialty work and facility services,” says Alan S. McKim, chairman, president and CEO of Clean Harbors. “This acquisition highlights our disciplined approach to M&A, which is geared around accretive transactions that create multiple cross-selling opportunities and drive waste into our network.”
HPC says it expects to generate approximately $744 million in 2021, with full-year adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $115 million. Clean Harbors estimates it can achieve cost synergies of $40 million from the acquisition after the first full year of operations. This would equate to a purchase multiple of 8.1 times on a post-synergized basis. The company expects to fund the acquisition through a combination of available cash and the issuance of additional debt.
According to the company, Clean Harbors’ planned acquisition of HPC offers significant strategic benefits, including:
- brings on a talented and experienced leadership team with a track record of growth;
- increases the size, scale and capabilities of the industrial services and field services businesses;
- drives incremental volumes of waste into Clean Harbors’ incinerators, landfills and other waste treatment facilities;
- adds deep customer relationships, including more than 180 embedded locations;
- improves the company’s industrial services safety profile through more automation and hands-free technologies;
- generates considerable cross-selling opportunities, particularly in the disposal and emergency response sectors; and,
- captures significant synergies in areas like customer service, transportation, branch network, asset rentals, vehicle and tank refurbishment, subcontracting and procurement.
HPC has more than 5,000 employees and operates in more than 240 locations. The company’s fleet consists of more than 5,600 units including vacuum trucks, roll-off trucks, high-pressure water blasters and light duty vehicles. In addition, HPC says it is the only provider of industrial cleaning and specialty services with a dedicated manufacturing and technology center.
“One of the many reasons we were attracted to HPC is its differentiated technology, which provides safe, highly efficient and more profitable cleaning and specialty solutions,” McKim says. “HPC leads the industry when it comes to hands-free technologies and automation for industrial services. Part of our ESG efforts have been focused on ensuring the safety of our people and our customers. The acquisition of HPC is another important step in that direction.”
Goldman Sachs is the financial advisor to Clean Harbors and is providing a $1 billion debt commitment for the transaction. Davis, Malm & D’Agostine is serving as legal counsel to Clean Harbors. For HPC, Moelis & Company is serving as the financial advisor with Troutman Pepper Hamilton Sanders as legal counsel.