Update: Private investment firm buys WCA Waste

Update: Private investment firm buys WCA Waste
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By Jim Johnson | WRN senior reporter

Jan. 6 — Another blockbuster deal is in the works for the U.S. trash industry: WCA Waste Corp. is being acquired by an investment fund operated by Macquarie Group Ltd.

Macquarie Infrastructure Partners II will acquire all of WCA Waste´s outstanding shares for $ 6.50 and redeem all Series A preferred stock and refinance debt in a deal valued at about $ 526 million, the trash company said.

Macquarie is paying a 30% premium over WCA Waste´s closing price on Dec. 20, the Houston-based company said.

Tommy Fatjo, senior vice president of finance for WCA Waste, spoke about the deal about 90 minutes after the acquisition was announced on Dec. 21. “It seems like the next logical step for our company to be able to continue to grow.”

“Obviously there are a lot of opportunities out there. And Macquarie has substantial capital that would allow us to take advantage of opportunities that are in our markets and new markets as well,” he said.

Macquarie is a name that is familiar in solid waste circles, as that firm took part in a 2007 deal to take Waste Industries USA Inc., of Raleigh, N.C., private in a $ 544 million transaction.

That deal was made through a separate Macquarie infrastructure investment fund, company spokeswoman Paula Chirhart said.

“One of the things that really attracted us is that their management team has built successful operations across a number of attractive geographies,” Chirhart said. “The other thing is we know the industry through our past experience through our acquisition of Waste Industries. We understand how it works. We understand how to help grow the business.”

WCA Waste and Waste Industries, for the foreseeable future, will remain separate, Fatjo said.

“I´m sure there´s a lot of ideas that Macquarie is going to have that they´ve learned from being involved in Waste Industries that we might look at. But I don´t see any operational synergies between the two companies,” he said.

Fatjo´s father, Tom Fatjo Jr., is CEO at WCA Waste and an industry icon who founded Browning-Ferris Industries Inc. in the 1960s. While nothing is set in stone, Tommy Fatjo said, there are no plans to change management at WCA Waste.

“We´re basically moving forward as is. I don´t see any major changes in that,” Tommy Fatjo said.

The deal allows WCA Waste to keep a focus on growth with a particular emphasis around the company´s 25 landfills. WCA Waste has built a business covering portions of 14 states that serves about 450,000 customers through its landfills, 29 transfer stations and 29 collection operations.

Macquarie and WCA Waste started meeting in July, at first just getting together over lunch to talk about the industry, Fatjo said. From there, talks progressed and culminated last week.

WCA Waste´s board already approved the deal, which is expected to close during the first quarter of 2012. WCA Waste shareholders still must give their blessing.

News of WCA Waste´s sale comes not long after a decision by Veolia ES Solid Waste Inc.´s parent company to put that operation up for sale. n

Contact Waste & Recycling News senior reporter Jim Johnson at jpjohnson@crain.com or 937-964-1289.

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