Acquisition activity remains high for the U.S. solid waste and recycling industry, including numerous deals from privately-owned or private equity-backed players. While major mergers are becoming less common in the space, given consolidation trends and antitrust factors, many of the industry’s large, publicly traded companies remain quite active.
Here’s a breakdown of their recent spending and details on their 2022 strategies.
|Q2 Acquisition Spend*||2022 Spend*||2022 Annualized Revenue Acquired|
|Republic Services||$2.473B||$2.516B||Not reported|
|Casella Waste Systems||$6.5M||$56.25M||$47M|
*Spending totals are net of cash acquired.
**GFL figures converted from Canadian to U.S. dollars for comparison purposes, based on Aug. 10 exchange rate.
While WM has been very quiet on the acquisition front after its 2021 purchase of Advanced Disposal Services for $4.6 billion, that’s now expected to change. Following the joint venture investment to back Continuus Materials that it announced in January, the company anticipates ramping up spending to anywhere from $300 million to $400 million on deals this year. The focus will largely be on traditional solid waste and recycling companies, including tuck-in opportunities. The company described its spending plans as well above a prior norm of $100 million to $200 million in annual M&A spending.
Coming off the sizable $2.2 billion acquisition of US Ecology in May, Republic remains active with acquisitions and anticipates spending $600 million on other transactions in 2022. The company intends to primarily focus on the solid waste and recycling space for near-term deals, rather than any other large environmental services purchases, but it does see further tuck-in opportunities to leverage the US Ecology platform. Overall, Chief Financial Officer Brian DelGhiaccio said during a recent earnings call that the company’s pipeline of possible deals has “never been stronger and more positive,” with further opportunities into 2023.
Waste Connections continues to view M&A as an important lever for growth and has purchased 12 businesses this year (including eight it acquired in the second quarter). According to CEO Worthing Jackman, those companies are all focused on solid waste. They include “West Coast franchises as well as new market entries and tuck-ins spread across competitive markets in the U.S. and in Canada.” Waste Connections has deals worth another $225 million in annualized revenue under definitive agreement that are expected to close during the third quarter. It expects further deals to close during the fourth quarter or early 2023.
GFL has acquired 28 companies to date in the U.S. and Canada, largely tuck-ins with the exception of the larger Sprint Waste Services deal in Texas, worth an estimated $360 million (Canadian) in annualized revenue. During the six-month period ending in June, GFL acquired 25 businesses, with 21 of those focused on solid waste. GFL anticipates continuing to focus on tuck-ins for the remainder of the year; it may be employing a slightly more selective strategy going forward as it reviews potential targets that have not adapted well to the inflationary environment. “We’re still looking at things the same, but obviously have significantly more data points today to use to evaluate the different businesses in the different regions, just given the experience we have of our existing business today,” said CEO Patrick Dovigi during the company’s earnings call.
Casella has acquired 11 companies in the U.S. to date. According to its quarterly filing, those include a waste and recycling collection business in its Resource Solutions operating segment, a closed Massachusetts waste-to-energy facility that is being decommissioned and rebuilt as a transfer station, four collection tuck-ins in the company’s Western region, a portable toilets business in its Eastern region and a scrap metal collection business. Casella still sees a pipeline of potential deals worth an estimated $500 million in revenue within its Northeast footprint, with more expected in the months ahead.