Clean Harbors to acquire HEPACO for $400M

Clean Harbors has entered into a definitive agreement with Gryphon Investors to acquire HEPACO, a leading provider of specialized environmental and emergency response services in the Eastern United States, for $400 million in cash. The acquisition is expected to close in the first half of 2024, subject to regulatory approval and other customary closing conditions.

“HEPACO is a recognized leader in field services and its addition will accelerate the growth of our environmental services segment,” Clean Harbors co-CEO Eric Gerstenberg says. “When providing emergency services, scale and rapid response capabilities are critical. HEPACO’s geographic footprint, trained personnel and equipment fleet will enhance our existing business, enabling us to gain efficiencies and offer an even broader range of solutions.

“Field Services and emergency response have been a hallmark of Clean Harbors since our founding in 1980. We are confident that we can deliver strong shareholder value through this transaction in the years ahead.”

Headquartered in Charlotte, North Carolina, HEPACO has more than 2,000 customers, which it services through more than 40 regional locations in 17 states. Its primary offerings include field services, environmental remediation and emergency response services.

On an adjusted basis, HEPACO is expected to generate full-year 2023 EBITDA of approximately $36 million on $270 million in revenues. Clean Harbors expects the acquisition to generate cost synergies of approximately $20 million after the first full year of operations, which equates to a postsynergy acquisition multiple of 7.1 times. Clean Harbors expects to fund the acquisition through available cash and some additional debt financing issuance.

“The acquisition of HEPACO aligns with our Vision 2027 long-term strategic plan for driving growth through a continued focus on value creation across all areas of our business. We see an excellent cultural fit with our two organizations that should help ensure the success of this acquisition,” Clean Harbors co-CEO Mike Battles says. “HEPACO has demonstrated a commitment to safety, environmental compliance and service excellence that matches our principles in these areas. We look forward to welcoming HEPACO’s talented team to the Clean Harbors family.”

HEPACO employs approximately 1,000 people, operates a fleet of more than 900 vehicles and serves a diverse set of industry verticals. In addition to the company’s regional operations spanning 17 states, HEPACO’s National Operations Center provides 24-hour coverage across the continental U.S. through a network of contractors.

“Given its leading position in environmental and field services, as well as a 40-year history in emergency response, Clean Harbors is an ideal fit for HEPACO," HEPACO CEO Robb Schreck says. "Clean Harbors will provide HEPACO’s customers with far greater resources and access to North America’s largest network of permitted disposal and recycling assets. This transaction also will offer enhanced career opportunities for HEPACO employees.”

For this acquisition, Davis, Malm & D’Agostine is serving as legal counsel to Clean Harbors. For HEPACO, Piper Sandler Companies and Houlihan Lokey, Inc. are serving as financial advisors and Kirkland & Ellis LLP and Moore & Van Allen PLLC are serving as legal counsel.