UPDATE: May 6, 2020: During Republic Services' Q1 earnings call, in response to an analyst's question, CEO Don Slager reported the acquisition process for Santek Waste Services is "on track." President Jon Vander Ark said the transaction is currently undergoing regulatory review and "we're confident we're going to close that deal in the second half of the year."
- March 27, 2020: Republic Services is in the process of acquiring Tennessee-based Santek Waste Services, with the deal expected to close during Q2, according to multiple sources familiar with the transaction.
- The most recent publicly available information, from Waste Today, put Santek's annual revenue at $125 million in 2018. The vertically-integrated company has operations across nine states – Alabama, Arkansas, Georgia, Kentucky, Mississippi, North Carolina, Tennessee, Texas and Virginia.
- Santek now operates more than a dozen publicly-owned landfills across those states, the majority of which have many decades of disposal capacity remaining. The company also runs 11 transfer stations and multiple collection operations, across six states, according to its website.
Founded in 1986 by CEO Kenny Higgins, Santek was originally focused on being a public landfill operator. The company started out with contracts for sites in Bradley County and Loudon County, both in Tennessee, and has since grown to reportedly become the largest privately-held manager of publicly-owned solid waste landfills in the country. Santek later expanded into collection in the late 1990s, per a Waste Advantage profile.
The company has grown in recent years through new financing and acquisitions. Following a $153 million recapitalization in 2015, Santek purchased collection companies in multiple states, with the April 2019 acquisition of Tennessee-based All Pro Sanitation among the recent transactions. The company also completed a $290 million recapitalization in May 2019, which Higgins described as "the beginning of a new chapter in the Santek growth story" in a Waste360 article.
Yet sources indicate there has been casual discussion of a possible sale for some time. Santek could not be reached for comment prior to publishing time. Republic declined to answer a question on what made the deal a good strategic fit, offering the following statement.
"As a matter of policy, Republic Services does not comment to the media on speculation about or [sic] pending deal-related activity," Donna Egan, director of external communications, told Waste Dive via email. "Republic Services is committed to growing through strategic and tuck-in acquisitions that leverage our core capabilities and expertise while enhancing and expanding the waste, recycling and environmental services we provide to our customers."
Santek's assets are a clear fit for Republic, given its large presence in the region, with a couple markets seen as particularly advantageous, according to sources and research. Republic has a sizable collection operation in Birmingham, Alabama, but recently announced its Pineview Landfill northwest of the city would be closing in 2025 as part of a consent agreement. Santek is contracted to operate two landfills for Jefferson County, north of the city, that have ample remaining capacity.
The Bradley County Landfill is conveniently located outside Chattanooga, Tennessee, where Republic also has a notable presence. Santek's footprint could also be advantageous for future disposal capacity needs around the fast-growing Atlanta market, where Republic is a similarly large player. Further internalization opportunities may be available for Republic in other markets as a result of the deal, based on how its current business fits with Santek's footprint, and this would also neutralize a regional collection competitor.
Republic previously projected spending at least $200 million on acquisitions in 2020, but the company set a similar target for 2019 and ultimately spent $526 million on deals. During the most recent earnings call in February, CEO Don Slager said Republic had "the most robust pipeline we've seen in years" with "really good companies" in the mix.
At the time, Slager said he wouldn't be surprised if Republic "matched or exceeded" last year's numbers. Sources tell Waste Dive that one recent acquisition alone, a C&D recycling company with rail transfer capabilities in Massachusetts, comprised a notable portion of that initial $200 million estimate.
Despite current economic uncertainty around the new coronavirus pandemic, Republic appears to remain on track with active M&A plans. A March 24 investor update touted the company's resilience and listed “growing the business through opportunistic acquisition investments” as a continued priority for capital allocation.