US Ecology, Inc. (Nasdaq-GS: ECOL) today announced that it has
entered into a definitive merger agreement with NRC Group Holdings
Corp. (NYSE American: NRCG), a national leader in comprehensive
environmental, compliance and waste management services to the
marine and rail transportation, general industrial and energy
industries, in an all-stock transaction with an enterprise value of
$966 million. The transaction is expected to close in the fourth
quarter of 2019 and is subject to clearance under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
respective stockholder approvals and other customary closing
conditions. The transaction will create a nationwide leader in
industrial and hazardous waste management services and is projected
to be mid-single digit accretive to US Ecology’s 2020 adjusted
earnings per share, before synergies.
“The addition of NRCG’s substantial service network strengthens
and expands US Ecology’s suite of environmental services,” said
Jeffrey R. Feeler, President, Chief Executive Officer and Chairman
of US Ecology. “This transaction will establish US Ecology as a
leader in standby and emergency response services and adds a new
waste vertical in oil and gas exploration and production landfill
disposal to further drive waste volumes throughout the Gulf
region.”
NRCG is one of two leading national Oil Spill Removal
Organizations (“OSRO”) that provide mandated standby emergency
response for the transportation of oil products. With more
than 50 service centers, NRCG has a national service network
providing emergency and spill response, light industrial services,
hazardous and industrial waste management and transportation
services. From a growing base of disposal assets in the two
key oil basins in the Gulf region, the Permian and the Eagle Ford,
NRCG provides landfill disposal of waste from oil and gas drilling,
treatment and handling of residual waste streams and rental and
transportation services to support its disposal operations.
“NRCG will bring highly complementary services and customers to
US Ecology and will position the combined company as a leading
player in industrial waste management while strengthening its
position in the overall environmental services market,” said
Christian T. Swinbank, President and Chief Executive Officer of
NRCG. “We believe the combination will provide compelling upside
for stockholders of both companies.”
The transaction has been approved by both companies’ Boards of
Directors. Upon completion of the transaction, US Ecology
stockholders will own approximately 70% of the combined company,
and NRCG stockholders will own approximately 30% on a fully diluted
basis. The combined company will use the US Ecology name, and its
shares will continue to be listed on the Nasdaq Global Select
Market under the ticker ECOL. Jeffrey R. Feeler will continue
to serve as President, Chief Executive Officer and Chairman of the
Board of Directors. The company will maintain its headquarters in
Boise, Idaho with regional support centers in Boise, Detroit, New
York and Houston.
Strategic Benefits
- Will expand leadership in specialty and industrial
waste services. This merger supports US Ecology’s vision
of becoming the premier provider of comprehensive environmental
services by adding high quality landfill disposal assets, a
complementary new oil and gas exploration and production
(“E&P”) waste stream, and an expanding scale of key service
verticals that drive volume to US Ecology’s fixed facilities.
- Will establish a leadership position in marine and
land-based emergency response, including a premier standby
network. As a nationally-recognized OSRO, NRCG generates a
recurring, compliance-driven revenue stream, with upside from spill
events and international expansion, particularly in Mexico and
Canada. The acquisition adds over 50 additional service sites that
provide emergency response (“ER”), “light” industrial services and
waste handling to drive recurring base business through US
Ecology’s national service network.
- Will Provide National Service Network, which is
Consistent with US Ecology’s Growth
Strategy. The addition of over 50
service sites will provide a platform to support other field
services offered by US Ecology, including retail compliance, lab
pack, and LTL waste transportation.
- Will provide significant opportunities for synergies,
with ROIC projected to exceed the cost of capital in the first full
year. This is a highly accretive transaction with
synergies of approximately $20 million and potential for upside
through realization of additional revenue and cross-selling
opportunities.
- Will draw upon the collective talents of both
companies. The combination of US Ecology and NRCG is
intended to create a best-of-breed enterprise that will harness the
experience and expertise of each organization to ensure that
customers benefit fully from their complementary capabilities.
Financial Highlights
NRCG’s pro forma revenue and adjusted EBITDA, as reported, were
approximately $389 million and $91 million, respectively, for the
year ended December 31, 2018, which includes pro forma adjustments
for its 2018 acquisitions. NRCG is expected to contribute
approximately $120 million to US Ecology’s adjusted EBITDA in the
first full year following the combination and be accretive in the
mid-single digits to US Ecology’s 2020 adjusted earnings per share,
before synergies. Adjusted EPS excludes transaction, integration
and other nonrecurring expenses.
Terms of the Transaction
Under the terms of the merger agreement, US Ecology will form a
new holding company which will take the name of US Ecology, Inc.
immediately upon the closing of the transaction and will own both
US Ecology and NRCG.
US Ecology stockholders will receive 1 share of common stock of
the new holding company for each share of US Ecology common stock
they own upon closing of the transaction.
NRCG common stockholders will receive 0.196 shares of common
stock of the new holding company for each share of NRCG common
stock they own upon closing of the transaction. The exchange
ratio represents a price of $12.00 per share of NRCG stock, based
on the US Ecology average share price over the last 15-trading
days. The $12.00 price per share represents a premium of
approximately 36% to NRCG’s June 21, 2019 closing price of
$8.83.
Each share of NRCG’s 7.00% Series A Convertible Cumulative
Preferred Stock is expected to be converted in the merger into
approximately 1.8 common shares of the new holding company.
NRCG’s 19.249 million outstanding Warrants to purchase NRCG
common stock will be converted to 3.773 million Warrants to
purchase common stock of the new holding company, with a strike
price of $58.67 each.
The transaction will provide NRCG stockholders with continued
participation in the future prospects expected to result from the
combination through their ownership of approximately 30% of the
stock of the new holding company, on a fully diluted basis.
US Ecology will refinance NRCG’s existing senior credit
facilities through a new Term Loan B. Wells Fargo Securities, LLC
and Bank of America Merrill Lynch, have agreed to provide committed
financing for the transaction. The transaction is not subject to a
financing contingency.
Advisors
Bank of America Merrill Lynch and Houlihan Lokey are serving as
US Ecology’s financial advisors and Dechert LLP is serving as legal
counsel. Evercore is serving as NRCG’s financial advisor and Jones
Day is serving as legal counsel. Wells Fargo Securities, LLC and
Bank of America Merrill Lynch are acting as Joint Lead Arrangers
for the financing.
Conference Call
US Ecology, Inc. will hold an investor conference call on
Monday, June 24, 2019 at 9:00 a.m. Eastern Daylight Time (7:00 a.m.
Mountain Daylight Time) to discuss this acquisition.
Questions will be invited after management’s presentation.
Interested parties can join the conference call by dialing (877)
512-4138 or (412) 317-5478. The conference call will also be
broadcast live on US Ecology’s website at www.usecology.com.
An audio replay will be available through July 1, 2019, by calling
(877) 344-7529 or (412) 317-0088 and using the passcode 10132865.
The replay will also be accessible on US Ecology’s website at
www.usecology.com.
About US Ecology, Inc.
US Ecology, Inc. is a leading North American provider of
environmental services to commercial and government entities. The
company addresses the complex waste management needs of its
customers, offering treatment, disposal and recycling of hazardous,
non-hazardous and radioactive waste, as well as a wide range of
complementary field and industrial services. US Ecology’s focus on
safety, environmental compliance, and best–in-class customer
service enables us to effectively meet the needs of US Ecology’s
customers and to build long lasting relationships. US Ecology has
been protecting the environment since 1952 and has operations in
the United States, Canada and Mexico. For more information, visit
www.usecology.com.
About NRC Group Holdings Corp.
NRC Group Holdings Corp. is a global provider of a wide range of
environmental, compliance and waste management services. NRCG’s
broad range of capabilities and global reach enable it to meet the
critical, and often non-discretionary, needs of more than 5,000
customers across diverse end markets to ensure compliance with
environmental, health and safety laws and regulations around the
world. NRC Group, a wholly owned subsidiary of NRCG, was
established in June 2018 through the combination of two businesses,
National Response Corporation and Sprint Energy Services, both
previously operating separately under the ownership of investment
affiliates of J.F. Lehman & Company. For more information,
please visit www.nrcg.com. No portion of the website referenced in
this paragraph is incorporated by reference into or otherwise
deemed to be a part of this news release.
FORWARD LOOKING STATEMENTS
Statements in this communication that are not historical facts
are forward-looking statements that reflect US Ecology’s and NRCG’s
respective management’s current expectations, assumptions and
estimates of future performance and economic conditions. These
forward-looking statements are made in reliance on the safe harbor
provisions of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. These forward-looking
statements relate to, among other things, the anticipated closing
of the proposed transaction, the satisfaction of closing conditions
to the transaction, the expected benefits of the proposed merger,
including estimated synergies, estimates and projections concerning
the business and operations, strategic initiatives and value
creation plans of the combined companies, the ownership structure
of the combined company and the refinancing of NRCG’s existing
indebtedness. All statements other than historical facts may be
forward-looking statements; words such as “anticipate,” “believe,”
“could,” “design,” “estimate,” “expect,” “forecast,” “goal,”
“guidance,” “imply,” “intend,” “may”, “objective,” “opportunity,”
“outlook,” “plan,” “position,” “potential,” “predict,” “project,”
“prospective,” “pursue,” “seek,” “should,” “strategy,” “target,”
“would,” “will” or other similar expressions that convey the
uncertainty of future events or outcomes are used to identify
forward-looking statements. Such forward-looking statements are not
guarantees of future performance and are subject to risks,
uncertainties and other factors, some of which are beyond the
control of US Ecology or NRCG. Factors that could cause US
Ecology’s or NRCG’s actual results to differ materially from those
implied in the forward-looking statements include: (1) the risk
that the conditions to the closing of the transaction are not
satisfied, including the risk that required approvals for the
transaction from governmental authorities or the stockholders of
NRCG or US Ecology are not obtained; (2) the occurrence of any
event, change or other circumstances that either could give rise to
the right of one or both of NRCG or US Ecology to terminate the
Merger Agreement, (3) litigation relating to the transaction; (4)
uncertainties as to the timing of the consummation of the
transaction and the ability of each party to consummate the
transaction; (5) risks related to disruption of management time
from ongoing business operations due to the proposed transaction;
(6) unexpected costs, charges or expenses resulting from the
transaction (7) the ability of NRCG and US Ecology to retain and
hire key personnel; (8) competitive responses to the proposed
transaction and the impact of competitive services; (9) certain
restrictions during the pendency of the mergers that may impact
NRCG’s or US Ecology’s ability to pursue certain business
opportunities or strategic transaction; (10) the terms and
availability of the indebtedness planned to be incurred in
connection with the transaction to refinance NRCG’s existing
indebtedness; (11) potential adverse changes to business
relationships resulting from the announcement or completion of the
transaction; (12) the combined companies’ ability to achieve the
growth prospects and synergies expected from the transaction, as
well as delays, challenges and expenses associated with integrating
the combined companies’ existing businesses; and (13) legislative,
regulatory and economic developments, including changing business
conditions in the industries in which NRCG and US Ecology operate.
These risks, as well as other risks associated with the proposed
transaction, will be more fully described in the joint proxy
statement/prospectus that will be filed with the Securities and
Exchange Commission (“SEC”) in connection with the proposed
transaction. Investors and potential investors are urged not to
place undue reliance on forward-looking statements in this
communication, which speak only as of this date. Neither US Ecology
nor NRCG undertakes any obligation to revise or update publicly any
forward-looking statement to reflect future events or
circumstances. Nothing contained herein constitutes or will be
deemed to constitute a forecast, projection or estimate of the
future financial performance of US Ecology, NRCG or the combined
company, whether following the implementation of the proposed
transaction or otherwise.
In addition, actual results are subject to other risks and
uncertainties that relate more broadly to US Ecology’s and NRCG’s
overall business, including those more fully described in US
Ecology’s and NRCG’s filings with the SEC.
No Offer or Solicitation
This communication relates to a proposed business combination
between US Ecology and NRCG. The information in this communication
is for informational purposes only and is neither an offer to
purchase, nor a solicitation of an offer to sell, subscribe for or
buy any securities or the solicitation of any vote in any
jurisdiction pursuant to the proposed transactions or otherwise,
nor shall there be any sale, issuance or transfer of securities in
any jurisdiction in contravention of applicable law. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Additional Information and Where to Find It
In connection with the proposed transaction, US Ecology will
file with the SEC a Registration Statement on Form S-4 that will
include the Joint Proxy Statement of US Ecology and NRCG and a
Prospectus of US Ecology, as well as other relevant documents
regarding the proposed transaction. INVESTORS AND SECURITY HOLDERS
ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT, INCLUDING THE
JOINT PROXY STATEMENT/PROSPECTUS, REGARDING THE MERGERS WHEN THIS
DOCUMENT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED
WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE
DOCUMENTS, BECAUSE THESE DOCUMENTS WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. A definitive Joint
Proxy Statement/Prospectus will be mailed to stockholders of US
Ecology and NRCG. A free copy of the Joint Proxy
Statement/Prospectus, as well as other filings containing
information about US Ecology and NRCG, may be obtained once it
becomes available at the SEC’s website, www.sec.gov. You will also
be able to obtain these documents, free of charge, by accessing US
Ecology’s website at https://investors.usecology.com/ or by
accessing NRCG’s website at www.ir.nrcg.com.
Participants in the Solicitation Relating to the
Mergers
US Ecology and NRCG and their respective directors and executive
officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies from US
Ecology stockholders and NRCG stockholders in respect of the
proposed transaction. Information regarding US Ecology’s directors
and executive officers is contained in US Ecology’s Annual Report
on Form 10-K for the year ended December 31, 2018 and its Proxy
Statement on Schedule 14A, dated April 11, 2019, which are filed
with the SEC. Information regarding NRCG’s directors and executive
officers is contained in NRCG’s Annual Report on Form 10-K for the
year ended December 31, 2018 and its Proxy Statement on Schedule
14A, dated April 17, 2019, which are filed with the SEC. Additional
information regarding the interests of those participants and other
persons who may be deemed participants in the transaction will be
included in the registration statement and joint proxy
statement/prospectus and other relevant materials to be filed with
the SEC when they become available. Free copies of these
documents may be obtained as described in the preceding
paragraph.
US Ecology
Contact: Alison Ziegler, Darrow Associates (201)
220-2678aziegler@darrowir.com www.usecology.com
NRC Group Holdings Corp.
Contact: Cody Slach or Jared Filippone, CFA, Gateway
Investor Relations (949) 574-3860 NRCG@gatewayir.com
US Ecology (NASDAQ:ECOL)
Historical Stock Chart
From Mar 2024 to Apr 2024
US Ecology (NASDAQ:ECOL)
Historical Stock Chart
From Apr 2023 to Apr 2024