Interstate Waste Services Announces Acquisition of Oak Ridge Waste & Recycling

Rhea-AI Summary

Interstate Waste Services, Inc. announces the acquisition of Oak Ridge Waste & Recycling to expand its waste collection and recycling services in the tristate area. The acquisition follows IWS's subsidiary, Action Environmental, being selected as an authorized waste hauler in NYC, positioning IWS for significant growth. The deal is expected to close by Q1 2024.

Insights

Market Research Analyst

The acquisition of Oak Ridge Waste & Recycling by Interstate Waste Services (IWS) is a strategic move aimed at consolidating the waste management industry within the tristate area. The integration of Oak Ridge into IWS's operations is poised to enhance the company's market share and competitive edge, particularly as it coincides with IWS's recent authorization under New York City's Commercial Waste Hauling Program.

The waste management industry is often characterized by economies of scale, where larger companies can achieve cost efficiencies through expanded geographic reach and consolidated operations. IWS's acquisition can be viewed as a pursuit of these efficiencies, potentially leading to improved margins. The focus on waste-by-rail transfer capabilities is also notable, as it suggests an investment in sustainable and efficient waste transportation methods, which could appeal to environmentally conscious stakeholders and regulators.

For investors, the immediate benefits mentioned by IWS's CEO, such as the integration of vertically integrated rail assets and additional resources for investment, could translate into a stronger financial position and long-term growth prospects for IWS. However, investors should also consider the risks associated with mergers and acquisitions, such as integration challenges and the assumption of any potential liabilities from Oak Ridge.

Financial Analyst

The financial implications of IWS's acquisition of Oak Ridge are multi-faceted. The transaction is likely financed through a mix of equity and debt, as evidenced by the recent equity recapitalization involving Ares Management Corporation and Littlejohn & Co. This recapitalization provided IWS with liquidity, which is crucial for funding such acquisitions.

The acquisition could lead to synergies that may result in cost savings and increased profitability. Investors should monitor IWS's post-acquisition financials for evidence of these synergies and the impact on the company's earnings. The deal's success will largely depend on the seamless integration of Oak Ridge's operations and the realization of projected growth in the newly awarded zones under Local Law 199.

While the announcement does not disclose the financial terms, the market will be looking at the price paid relative to Oak Ridge's earnings before interest, taxes, depreciation and amortization (EBITDA) to gauge whether IWS paid a premium and how the acquisition might affect IWS's leverage ratios and creditworthiness.

Legal Expert

From a legal standpoint, the acquisition's completion is subject to customary closing conditions and potentially regulatory approvals. The role of legal counsel in such transactions is critical, as they ensure compliance with applicable laws and regulations and address any antitrust concerns that might arise from consolidating market players.

Local Law 199, which has facilitated IWS's growth in New York City, represents a regulatory environment that favors organized and efficient waste management operations. The legal frameworks governing waste management are complex, involving environmental regulations and municipal contracts. Investors should be aware that any changes in these regulations or contracts could impact IWS's operations and, consequently, its financial performance.

Furthermore, the due diligence process, conducted by legal counsel, is essential in identifying any legal risks associated with Oak Ridge's operations, such as pending litigations or compliance issues, which could affect the valuation and the long-term success of the acquisition.

NEW YORK, Feb. 12, 2024 /PRNewswire/ -- Interstate Waste Services, Inc. ("IWS"), a leading, vertically integrated waste-by-rail provider of solid waste collection, disposal and recycling services announced it has entered into a definitive agreement to acquire Oak Ridge Waste & Recycling ("Oak Ridge"), one of Connecticut's preeminent providers of waste collection, transfer, and recycling services in Southwestern Connecticut and Suburban New York, further expanding IWS's service footprint into the tristate area. The transaction is expected to close by the end of the first quarter of 2024.

The acquisition comes on the heels of IWS subsidiary Action Environmental's selection as an authorized waste and recycling hauler under New York City's Commercial Waste Hauling Program, Local Law 199. IWS subsidiary, Action Environmental, was awarded 14 out of 20 zones and a city-wide containerized award, more zones than any other hauler, positioning IWS for significant growth in New York City.

Oak Ridge serves commercial, residential, municipal, and industrial customers throughout Western Connecticut and New York's Westchester and Putnam Counties through a network of collection and post-collection facilities, including a waste-by-rail transfer and recycling facility in Danbury, a state-of-the-art materials recovery facility in Shelton, CT and a transfer station in Norwalk, CT.  The company's intense focus on service excellence delivered through a local, high-touch family culture aligns well with IWS, which is celebrating its 25^th anniversary serving a broad regional footprint in New York and New Jersey with a similar high-touch, local, family business culture.    

"Oak Ridge has an established presence in an attractive adjacent market delivering collection and processing services through a dedicated workforce and an entrenched culture that fits exceptionally well with IWS," said Michael DiBella Chief Executive Officer of Interstate Waste Services. "Since our teams have experience working side-by-side, we expect a seamless transition and the immediate benefit of not only the IWS vertically integrated rail assets, but also resources for further investment in people, assets and systems, along with the collaboration of experienced leadership in both organizations."

"We are excited to combine businesses and secure the resources for further growth in our markets while leveraging IWS's waste-by-rail network," Oak Ridge's Managing Partner and CEO John Decker said. "Mike [DiBella] and I have a long professional relationship and our teams have worked together making this a natural fit."

The acquisition of Oak Ridge marks the first geographic expansion since IWS announced in late 2023 it had completed an equity recapitalization led by the Private Equity Group of Ares Management Corporation (NYSE: ARES) and Littlejohn & Co., a private investment firm based in Greenwich, CT, who has been an investor in IWS since 2020. The equity recapitalization was supported by a broadly syndicated term loan financing that provides IWS with significant liquidity and capital to execute on its growth plans.

Stifel served as financial advisor to Oak Ridge Waste & Recycling, and Whiteman Osterman & Hanna served as legal counsel. Kirkland & Ellis LLP served as legal counsel to Interstate Waste Services.

About Interstate Waste Services, Inc.
Interstate Waste Services, Inc. ("IWS") is a vertically-integrated provider of solid waste and recycling services in the greater New York City and Northern New Jersey markets. IWS operates over 600 collection vehicles throughout the five boroughs of NYC, Northern and Central NJ, and Orange and Rockland County New York serviced by a network of 22 material recovery, transfer, transload facilities and a rail-served solid waste landfill. IWS is one of the most progressive and innovative providers of non-hazardous waste management services with a diverse range of residential, industrial and commercial customers. As one of the largest privately held solid waste companies in the US, IWS is a leader in the utilization of waste-by-rail transportation to reduce vehicle miles traveled and resulting greenhouse gas emissions. For more information, please visit www.interstatewaste.com.

About Oak Ridge Waste & Recycling, LLC
Oak Ridge Waste & Recycling, LLC is a leading provider of solid waste collection, transfer, recycling and waste-by-rail disposal services in Southwestern Connecticut and Suburban New York. Oak Ridge provides residential, commercial and C&D waste and recycling services through a regional network of transfer, trans-load and material recovery facilities. The company serves approximately 27,000 customer locations including offices, shopping malls, restaurants, conference centers, and private homes, among others. Oak Ridge has built a community-focused culture that has made them the "go-to" partner in the community.

Contact
Abby Fleissner 
Director of Marketing
Interstate Waste Services, Inc.  
afleissner@interstatewaste.com 
T: 716.400.9129

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SOURCE Interstate Waste Services, Inc.

FAQ

What acquisition did Interstate Waste Services, Inc. announce?

Interstate Waste Services, Inc. announced the acquisition of Oak Ridge Waste & Recycling to expand its waste collection and recycling services in the tristate area.

When is the expected closing date for the acquisition?

The acquisition is expected to close by the end of the first quarter of 2024.

Which subsidiary of IWS was selected as an authorized waste hauler in NYC?

IWS subsidiary, Action Environmental, was selected as an authorized waste hauler in NYC.

Who served as the financial advisor to Oak Ridge Waste & Recycling?

Stifel served as the financial advisor to Oak Ridge Waste & Recycling.

Which private equity group led the equity recapitalization for IWS?

The Private Equity Group of Ares Management Corporation led the equity recapitalization for IWS.