Clean Harbors to Acquire Safety-Kleen


Clean Harbors on Monday announced plans to acquire rerefiner Safety-Kleen in an all-cash transaction valued at $1.25 billion. Safety-Kleen, headquartered in Richardson, Texas, is owned by a group of investors, including Highland Capital Management of Dallas, Texas.

Subject to approval by U.S. and Canadian regulators, as well as other closing conditions, the transaction is expected to be completed by the end of 2012. While Norwell, Mass.-based Clean Harbors has received a financing commitment from Goldman Sachs Bank USA, it is considering several financing options for the transaction that may include a combination of existing cash, debt and equity.

Clean Harbors, which provides environmental, energy and industrial services, said it would maintain the Safety-Kleen brand going forward and operate its network of branch locations as a subsidiary.

Safety-Kleens management has been looking at adding additional rerefining capacity, and theres also opportunity to add more processing capability on back end so that theyre manufacturing more base and rerefined products, Clean Harbors Chairman and CEO Alan McKim said in a conference call Monday. As you know were also expanding quite a bit on our incineration capacity. So we look at both companies certainly being in a growth mode, where we can add more capacity, and bring in more waste volumes into our network.

He noted the two companies would work together on charting future growth. Its too soon to lay out the overall growth strategy without combining our two organizations together first and getting their buy in and input into this discussion, he said in the conference call. Were just able to start meeting with them literally this week. We together will lay out our 2013 plan.

McKim said that adding Safety-Kleens rerefining and recycling capabilities to its current offerings will enhance the sustainability options available to Clean Harbors existing customers and significantly broaden the range of services it can offer both companies customers. Safety-Kleen services over 200,000 customer locations, and we envision substantial cross-selling opportunities with its extensive customer base, he pointed out

Despite expansion in the North American rerefining market in recent years, McKim said there was still room for the industry to grow. When you look at the volume of oil, that will continue to grow, and there is a real desire for green initiatives, sustainability initiatives, he said during the conference call. Safety-Kleen has created a real differentiation in the market with the way that theyre marketing and selling their recycled products. I think that continues to have a lot of opportunity for growth.

Safety-Kleens East Chicago, Ind., rerefinery has 800 b/d of API Group I and 4,200 b/d of Group II capacity. The company also has a rerefinery in Breslau, Canada, with capacities of 700 barrels per day of Group I and 1,200 b/d of Group II.

In July 2012, the company began blending engine oils at its new $15 million East Chicago, Ind., facility. In a registration statement with the U.S. Securities and Exchange Commission for a proposed IPO on Aug. 14, Safety-Kleen noted it was in planning stages to build a third rerefinery and blending facility in the Gulf Coast region that would have about 50 million gallons of used oil rerefining capacity and blending capability for most of the rerefinerys lubricating oil production.

In response to a conference call question about whether management would move ahead with that planned rerefinery in the Gulf Coast region, Clean Harbors McKim said, Were certainly going to talk with them and get a better idea of what their plan is there. Its probably too soon to tell one way or another at this point.

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 has about 4,200 employees and operates a service fleet of more than 2,300 vehicles and 1,000 rail cars. It services more than 200,000 customer locations in the United States, Canada and Puerto Rico.

Currently Safety-Kleen collects about 200 million gallons of used oil annually. Safety-Kleen generated revenues of $1.3 billion in 2011.

Clean Harbors has more than 200 locations, including more than 50 waste management facilities, throughout North America in 38 U.S. states, seven Canadian provinces, Mexico and Puerto Rico. The company serves more than 60,000 customers.

Related Topics

Market Topics