M&A

EQT Infrastructure to acquire Covanta in $5.3B deal

Sweden-based EQT Infrastructure, a global investment organization, has acquired Covanta Holding Corp. in an effort to "accelerate the company’s journey towards becoming the most sustainable provider of waste disposal services."

Under the terms of the agreement, shareholders will receive $20.25 in cash per share of Covanta's common stock in a transaction valued at $5.3 billion, including the assumption of Covanta’s net debt obligations. The purchase price represents a 37 percent premium to Covanta’s unaffected share price of $14.86 on June 8, the day prior to initial media speculation on the transaction.

The acquisition is subject to Covanta shareholder approval, as well as customary government approvals, and is expected to close in the fourth quarter of this year.

“We are pleased to announce this agreement with EQT,” says Michael Ranger, president and CEO of Covanta. “Our comprehensive analysis during the past nine months has been singularly focused on enhancing value for our shareholders. EQT certainly recognizes the value we see in our business, and this transaction represents an excellent outcome of our strategic review.

"Furthermore, as an organization dedicated to sustainability and environmental stewardship, EQT shares our vision for a safer, cleaner and more prosperous future through sustainable waste management, thereby ensuring no waste is ever wasted. We couldn’t ask for a better partner as we embark on this next phase of our company’s evolution, delivering on our goal of building a sustainable future for all stakeholders.”

Covanta is currently the world’s leading waste-to-energy provider, operating facilities in North America, Europe and the U.K. Annually, Covanta’s 40-plus facilities process approximately 21 million tons of waste from municipalities and businesses and convert it into renewable electricity to power over 1 million homes.

Following the completion of the acquisition, EQT says it will work with Covanta’s management team to build upon the company’s strengths, such as its portfolio of assets that provide essential waste services to municipalities and commercial customers, its long-term community relationships and its numerous growth opportunities, including a robust U.K. project pipeline of new waste-to-energy infrastructure and Covanta’s Environmental Solutions platform.

Covanta will maintain its corporate headquarters in Morristown, New Jersey, and its management team is expected to remain in place.

“EQT and Covanta are proven business leaders who share a like-minded approach to environmental stewardship, and this acquisition aligns directly with EQT’s thematic approach of investing in sustainable businesses that have a positive impact on society,” says Alex Darden, partner within EQT Infrastructure’s Advisory Team. “EQT is excited to partner with the entire Covanta team and to invest in organizational, operational and digital technology initiatives that will enhance Covanta’s ability to provide sustainable solutions to growing waste challenges. As a responsible investor, EQT is committed to working with Covanta on transforming and supporting the energy transition and circular economy across its local communities.”

Barclays served as lead financial advisor to EQT Infrastructure, and Kirkland & Ellis LLP served as legal counsel in connection with the transaction. Credit Suisse and TD Securities also served as financial advisors to EQT Infrastructure.

Kinderhook announces merger of Circon Environmental, Chemtron Corp. and KilnDirect Inc.

Kinderhook Industries LLC, New York City, has announced the merger of La Porte, Texas-based Circon Environmental; Avon, Ohio-based Chemtron Corp.; and Sumter, South Carolina-based KilnDirect Inc. Each company was an existing portfolio company of Kinderhook and will be rebranded under the Circon Environmental name.

According to a Kinderhook release, “the merger will create a leading pure-play provider of sustainable waste management solutions.”

Circon, Chemtron and KilnDirect each are dedicated to the engineering and processing of nonhazardous and hazardous waste streams to create fuel replacements to traditional natural gas and coal. Kinderhook says the vertically integrated platform will have the scale and capabilities to provide end-to-end environmental solutions on a national level for waste generators across all end markets.

“We are excited to combine three successful companies to create an ESG-focused environmental solutions platform. We believe the lack of a pure-play sustainability-focused provider of scale in the market creates a unique opportunity for the combined company, and we look forward to building this consolidated platform with our management team,” Rob Michalik, managing director at Kinderhook, says.

Frank Iezzi, who will serve as CEO of the combined platform, adds, “We are excited to welcome in Chemtron and KilnDirect into our growing family of companies. Through the addition of the Chemtron and KilnDirect teams, Circon’s expertise will be even stronger as we expand the products and services we offer with a focus on delivering an ever-growing level of sustainable environmental solutions to our customers.”

Kirkland & Ellis, Chicago, served as legal counsel to Kinderhook. Financing for the transaction was provided by Chicago-based Twin Brook Capital.