Heritage-Crystal Clean shareholders to receive
$45.50 per share in cash
Heritage-Crystal Clean, Inc. (Nasdaq: HCCI) (“Crystal Clean”), a
leading provider of parts cleaning, hazardous and non-hazardous
waste services, used oil re-refining, antifreeze recycling,
industrial and field services, and emergency and spill response
services, today announced that it has entered into a definitive
merger agreement to be acquired by an investment affiliate of J.F.
Lehman & Company (“JFLCO”), a leading private equity investment
firm focused on the aerospace, defense, maritime and environmental
sectors, in an all-cash transaction that values Crystal Clean at
approximately $1.2 billion.
Under the terms of the merger agreement, JFLCO will acquire all
the outstanding shares of Crystal Clean for $45.50 per share in
cash. The purchase price represents a premium of approximately
24.9% to Crystal Clean’s 60-day volume-weighted average price on
July 19, 2023, the last full trading day prior to today’s
announcement.
“We are pleased to enter into this agreement with JFLCO, which
we believe represents the best path forward for Crystal Clean to
maximize value for our shareholders,” said Crystal Clean’s
President and CEO, Brian Recatto. “For more than 20 years, we have
executed on our mission and thoughtfully grown Crystal Clean to
become the partner of choice nationwide for premier
environmentally-sustainable solutions that have a tangible impact
for customers, and we are excited to embark on this new
chapter.”
“As a private company, we will have added flexibility and a
deeply knowledgeable partner in JFLCO that understands our
strengths and employee-empowered culture. We are grateful to our
talented team, who have been instrumental in establishing Crystal
Clean as the leader we are today and look forward to building on
our momentum on the path ahead,” Mr. Recatto added.
“At a time when businesses across industries are more
environmentally conscious and highly focused on running cleaner, we
are excited to partner with Crystal Clean – a clear category leader
and unparalleled provider of environmental and waste disposal
services,” said Glenn Shor, Partner at J.F. Lehman & Company.
“This partnership underscores our confidence in Crystal Clean’s
business, vision and reputation as a trusted provider for a
diversified, blue-chip customer base. We look forward to working
closely together to best position the Company for sustainable,
long-term success.”
Transaction Details
Crystal Clean’s Board of Directors has unanimously approved the
merger agreement and recommends that Crystal Clean shareholders
vote in favor of the transaction.
The transaction is expected to close in the fourth quarter of
2023, subject to customary closing conditions, including approval
by Crystal Clean shareholders and the expiration of the waiting
period under the Hart-Scott-Rodino (HSR) Antitrust Improvements Act
of 1976. Upon completion of the transaction, Crystal Clean will
become a privately held company and shares of Crystal Clean common
stock will no longer be listed on the Nasdaq Stock Exchange or
trade in any other public market.
Fully committed debt financing in support of the transaction is
being provided by Jefferies Finance LLC and Sumitomo Mitsui Banking
Corporation. The merger is not subject to any financing
condition.
Additionally, The Heritage Group and its affiliates, which
collectively hold 26.70% of the Crystal Clean common shares, and
Brian Recatto, who holds 3.23% of the Crystal Clean common shares,
have each entered into a voting and support agreement with JFLCO
pursuant to which each has committed to vote all of its Crystal
Clean common shares in favor of the transaction.
The merger agreement provides for a “go-shop” provision under
which Crystal Clean and its Board of Directors may actively
solicit, receive, evaluate and potentially enter negotiations with
parties that offer alternative proposals during a 35-day period
following the execution date of the definitive agreement, expiring
at 11:59 p.m. Eastern Time on August 23, 2023. There can be no
assurance this process will result in a superior proposal. Crystal
Clean does not intend to disclose developments about this process
until it determines whether such disclosure is appropriate or
otherwise required.
Advisors
William Blair & Company is serving as financial advisor to
Crystal Clean, Stifel delivered a fairness opinion to Crystal Clean
with respect to the proposed transaction, and McDermott Will &
Emery LLP is serving as legal counsel to Crystal Clean.
Houlihan Lokey, Inc. is serving as lead financial advisor to
JFLCO, and Jefferies LLC is also serving as financial advisor to
JFLCO; Shearman & Sterling LLP and Jones Day are serving as
legal counsel to JFLCO.
Participants in the Solicitation
Crystal Clean and JFLCO and their respective directors,
executive officers and other members of management and employees,
under Securities and Exchange Commission (“SEC”) rules, may be
deemed to be “participants” in the solicitation of proxies from
stockholders of Crystal Clean in favor of the proposed transaction.
Information about Crystal Clean’s directors and executive officers
is set forth in Crystal Clean’s Proxy Statement on Schedule 14A for
its 2023 Annual Meeting of Shareholders, which was filed with the
SEC on May, 1, 2023. To the extent holdings of Crystal Clean’s
securities by its directors or executive officers have changed
since the amounts set forth in such 2023 proxy statement, such
changes have been or will be reflected on Initial Statements of
Beneficial Ownership on Form 3 or Statements of Change in Ownership
on Form 4 filed with the SEC. Additional information concerning the
interests of Crystal Clean’s participants in the solicitation,
which may, in some cases, be different than those of Crystal Clean
’s stockholders generally, will be set forth in Crystal Clean’s
proxy statement relating to the proposed transaction when it
becomes available.
Additional Information and Where to Find It
This release may be deemed to be solicitation material in
respect of the proposed acquisition of Crystal Clean by JFLCO. In
connection with the proposed transaction, Crystal Clean intends to
file relevant materials with the SEC, including a proxy statement
in preliminary and definitive form. BEFORE MAKING ANY VOTING
DECISION, INVESTORS AND STOCKHOLDERS OF CRYSTAL CLEAN ARE URGED TO
READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING CRYSTAL
CLEAN’S PROXY STATEMENT (IF AND WHEN AVAILABLE), BECAUSE THEY
CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. INVESTORS AND SECURITY HOLDERS ARE OR WILL BE ABLE TO
OBTAIN THE DOCUMENTS (if and when available) free of charge at the
SEC’s website at www.sec.gov, or free of charge from Crystal Clean
by directing a request to Mark DeVita, EVP & CFO, at
mark.devita@crystal-clean.com.
No Offer or Solicitation
This release is not intended to and shall not constitute an
offer to buy or sell or the solicitation of an offer to buy or sell
any securities, or a solicitation of any vote or approval, nor
shall there be any offer, solicitation or sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made in the United States absent registration under the
U.S. Securities Act of 1933, as amended, or pursuant to an
exemption from, or in a transaction not subject to, such
registration requirements.
About Heritage-Crystal Clean, Inc.
Heritage-Crystal Clean, Inc. provides parts cleaning, used oil
re-refining, hazardous and non-hazardous waste disposal, emergency
and spill response, and industrial and field services to vehicle
maintenance businesses, manufacturers and other industrial
businesses, as well as utilities and governmental entities. Our
service programs include parts cleaning, regulated containerized
and bulk waste management, used oil collection and re-refining,
wastewater vacuum, emergency and spill response, industrial and
field services, waste antifreeze collection, recycling and product
sales. These services help our customers manage their used
chemicals and liquid and solid wastes, while also helping to
minimize their regulatory burdens. Through our used oil re-refining
program, during fiscal 2022, we recycled approximately 66 million
gallons of used oil into high quality lubricating base oil, and we
are a supplier to firms that produce and market finished
lubricants. Through our antifreeze program during fiscal 2022 we
recycled approximately 4.5 million gallons of spent antifreeze
which was used to produce a full line of virgin-quality antifreeze
products. Through our parts cleaning program during fiscal 2022 we
recycled 2.3 million gallons of used solvent into virgin-quality
solvent to be used again by our customers. In addition, we sold 0.6
million gallons of used solvent into the reuse market. Through our
containerized waste program during fiscal 2022 we collected
approximately 22 thousand tons of regulated waste which was sent
for energy recovery. Through our wastewater vacuum services program
during fiscal 2022 we treated approximately 84 million gallons of
wastewater. Crystal Clean is headquartered in Hoffman Estates,
Illinois, and operates through 105 branch and industrial services
locations serving approximately 104,000 customer locations.
About J.F. Lehman & Company
J.F. Lehman & Company is a leading private equity investment
firm focused on the aerospace, defense, maritime and environmental
sectors. This investment strategy reflects the firm’s deep
experience in and commitment to these sectors since the firm’s
founding three decades ago. Headquartered in New York, NY, the firm
currently has approximately $4.5 billion of assets under
management. To learn more, please visit www.jflpartners.com.
Forward-Looking Statements
This press release contains forward-looking statements.
Forward-looking statements include, without limitation,
projections, predictions, expectations, or beliefs about future
events or results and are not statements of historical fact. Such
statements may include statements regarding the completion of the
proposed merger and the expected timing of the completion of the
proposed merger, the management of Crystal Clean upon completion of
the proposed merger and Crystal Clean’s plans upon completion of
the proposed merger. Such forward-looking statements are based on
various assumptions as of the time they are made, and are
inherently subject to known and unknown risks, uncertainties and
other factors that may cause actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. Forward-looking statements are often
accompanied by words that convey projected future events or
outcomes such as “expect,” “believe,” “estimate,” “plan,”
“project,” “anticipate,” “intend,” “will,” “may,” “view,”
“opportunity,” “potential,” or words of similar meaning or other
statements concerning opinions or judgment of Crystal Clean or its
management about future events. There can be no assurance that
actual results, performance, or achievements of Crystal Clean will
not differ materially from any projected future results,
performance or achievements expressed or implied by such
forward-looking statements. Actual future results, performance or
achievements may differ materially from historical results or those
anticipated depending on a variety of factors, some of which are
beyond the control of Crystal Clean, including, but not limited to,
the occurrence of any event, change or other circumstances that
could give rise to the termination of the merger agreement; the
inability to complete the proposed merger due to the failure to
obtain stockholder approval for the proposed merger or the failure
to satisfy other conditions to completion of the proposed merger;
risks related to disruption of management’s attention from Crystal
Clean’s ongoing business operations due to the proposed merger;
unexpected costs, charges or expenses resulting from the proposed
merger; Crystal Clean’s ability to retain and hire key personnel in
light of the proposed merger; certain restrictions during the
pendency of the proposed merger that may impact Crystal Clean’s
ability to pursue certain business opportunities or strategic
transactions; the ability of the buyer to obtain the necessary
financing arrangements set forth in the commitment letters received
in connection with the proposed merger; potential litigation
relating to the proposed merger that could be instituted against
the parties to the merger agreement or their respective directors,
managers or officers, including the effects of any outcomes related
thereto; the effect of the announcement of the proposed merger on
Crystal Clean’s relationships with its franchisees and customers,
operating results and business generally; and the risk that the
proposed merger will not be consummated in a timely manner, if at
all. Crystal Clean refers you to the “Risk Factors” and
“Management’s Discussion and Analysis of Financial Condition and
Results of Operations” sections of Crystal Clean’s Form 10-K for
the fiscal year ended December 31, 2022, and comparable sections of
the Crystal Clean’s Quarterly Reports on Form 10-Q and other
filings, which have been filed with the SEC and are available on
the SEC’s website at www.sec.gov. All of the forward-looking
statements made in this press release are expressly qualified by
the cautionary statements contained or referred to herein. The
actual results or developments anticipated may not be realized or,
even if substantially realized, they may not have the expected
consequences to or effects on Crystal Clean or its business or
operations. Readers are cautioned not to rely on the
forward-looking statements contained in this press release.
Forward-looking statements speak only as of the date they are made
and Crystal Clean does not undertake any obligation to update,
revise or clarify these forward-looking statements, whether as a
result of new information, future events or otherwise.
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version on businesswire.com: https://www.businesswire.com/news/home/20230719608998/en/
Heritage-Crystal Clean Contacts Investor Contact: Mark
DeVita Executive Vice President and Chief Financial Officer
mark.devita@crystal-clean.com 847-836-5670 Media Contact: Mike
Ademe Communications & Marketing Manager
mike.ademe@crystal-clean.com 224-281-1530 or Joele Frank, Wilkinson
Brimmer Katcher Eric Brielmann / Kaitlin Kikalo 212-355-4449
JFLCO Contact Karina Perelmuter IR@Jflpartners.com
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