Environmental services provider US Ecology on Monday announced it would acquire an energy industry-focused remediation and response company.
The $966 million, all-stock buyout of NRC Group Holdings (NRCG) is expected to be completed in the fourth quarter of the year, pending stockholder and regulatory approval, according to a US Ecology press release.
“This acquisition will combine highly complementary businesses, will expand each company’s footprint and enhance each company’s respective capabilities. The results should be enhanced value to stockholders of both companies,” US Ecology President, CEO, and board Chairman Jeff Feeler said Monday in a conference call with financial analysts.
Boise, Idaho-based US Ecology’s range of environmental and industrial services encompasses radioactive waste management, including operation of one of four U.S. commercial disposal facilities for low-level radioactive waste. It has more than 40 locations around the United States.
Houston-based NRC Group Holdings, formed by the 2018 merger of National Response Corp. and Sprint Energy Services, has more than 50 service locations and operates three landfills for waste from the Permian and Eagle Ford oil and gas basins. The company is one of two top U.S. oil spill removal organizations.
The new acquisition has had a small footprint in nuclear cleanup and radioactive waste management.
NRC Group Holdings provides management services for naturally occurring radioactive materials (NORM) that can be produced by oil and gas extraction activities. Services include extraction, decontamination, processing, and disposal of the material, according to the NRCG website.
The company has also done at least two jobs at the retired Dounreay fast-reactor research site in Scotland, which is now being decommissioned: asbestos removal and remediation of steam turbine oil system piping.
The companies’ boards of directors have already approved the deal. When it closes, US Ecology shareholders will own roughly 70% of the merged company, with NRCG shareholders owning the rest. It will operate under the US Ecology name, with Feeler remaining president, CEO, and board chairman.
“While Jeff Feeler and the US Ecology management team will be leading the combined company, we are creating integration teams to define plans for the company,” US Ecology spokesman Dave Crumrine said by email Thursday. “We have a great deal of respect for NRCG’s management and the broader team and culturally there is a fit with both teams having worked well together over the years.”
There are no plans for layoffs following the acquisition, Crumrine said. US Ecology presently employs 1,864 workers, while NRCG’s workforce exceeds, 1,950 employees.
Private equity firm J.F. Lehman & Co., which owns 66% of NRCG stock, has agreed to vote in favor of the deal. The company is, as of January 2018, also the owner of Dallas-based Waste Control Specialists, which operates one of the other U.S. low-level radioactive waste disposal facilities.
NRC Group Holdings in 2018 brought in $389 million in revenue and $91 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). The business is anticipated to provide roughly $120 million to US Ecology’s adjusted EBITDA in the initial 12-month period after the sale closes.
This is the latest in a series of US Ecology acquisitions over nearly a decade, most recently Ecoserve Industrial Disposal in November 2018. It is central to Idaho company’s growth plan, adding disposal resources for energy extraction and production and an emergency response network, according to Monday’s presentation.
Feeler said he expects the Department of Justice will sign off on the sale around August, without any antitrust concerns. “These two companies are really complementary, there’s not a lot of overlap with services capabilities.”
However, the New York City law firm of Bragar Eagel & Squire said Monday it would investigate potential claims against the NRCG board on behalf of the company’s current shareholders.
“Pursuant to the proposed transaction, announced on June 24, 2019 and valued at $966 million, NRCG shareholders will receive 0.196 shares of common stock of the new holding company for each share of NRCG common stock owned,” the announcement states. ”The investigation focuses on whether NRCG and its board of directors violated the federal securities laws and/or breached their fiduciary duties to the Company’s shareholders by failing to conduct a fair process and whether and by how much the proposed transaction undervalues the Company.”
Crumrine said US Ecology had no comment on the investigation, while the law firm did not respond to a query.
