Dive Brief:
- Casella Waste Services announced it will acquire New York-based Consolidated Waste Services, known as Twin Bridges Waste & Recycling, for approximately $219 million in cash. The deal is expected to close by the fourth quarter of 2023, pending regulatory approvals.
- The proposed acquisition includes two collection operations, a recently-built transfer station and a “state-of-the-art” MRF with robotic technology. The deal, expected to generate annualized revenues of about $70 million, also includes several satellite properties and an office building that Casella said would be used to “support future growth.”
- CEO John Casella said in a statement that he sees the acquisition as a “great opportunity” to increase the company’s vertical integration of disposal and recycling services in the greater Albany region. Twin Bridges is currently in the midst of a local legal dispute with a subsidiary of Waste Connections, and it’s unclear how the acquisition will affect that case.
Dive Insight:
The Twin Bridges deal represents another major investment in Casella’s long-term growth plans. It comes just months after the company announced its $525 million acquisition deal with GFL Environmental for assets in Pennsylvania, Delaware and Maryland — Casella’s largest acquisition in years.
Executives said during the company’s first quarter earnings call that it has about $500 million in “addressable opportunities” in the Northeast, but that the recent GFL deal could double that opportunity. Following recent regulatory approval, the GFL deal is now expected to close June 30.
The two deals put Casella at about $745 million in acquisition spend for the year, about four times the amount spent in 2021, according to an analysis from Jefferies. Casella announced it will sell $400 million of Class A common stock, in part to fund the two deals.
Vertical integration in the Northeast is an important strategy for Casella in part because of limited landfill space in the region, executives said during an investor’s summit discussion at Waste Expo in May. Casella expects a landfill in Albany to close in 2026. Casella has seen success expanding in other upstate markets, including in Albany with a Republic asset deal, as well as in western Massachusetts. Those market factors could also drive Casella’s plans to seek other acquisitions in the Mid-Atlantic region.
Casella already has a presence in the greater Albany area where Twin Bridges is based, and John Casella said the company has a “significant appreciation” for Twin Bridges’ “commitment to delivering excellent service to their customers while taking care of their people.”
Twin Bridges’ owner, Scott Earl, purchased the company in 2019 and expanded it over the years. It currently provides collection, transfer and recycling processing services for residential, commercial and industrial sectors.
In 2020, Waste Connections subsidiary County Waste — which Earl previously owned — sued Twin Bridges over alleged competitive interference in New York’s Capital Region related partly to acquisitions and pricing. That lawsuit is ongoing in state court, along with a parallel suit in federal court. The potential for Twin Bridges to be acquired has come up in the latest federal findings.
Earl did not immediately respond to a request for comment about the Casella deal or the ongoing lawsuit. Casella did not mention the suit in its acquisition announcement.
Casella said the acquisition is ideal in part because Twin Bridges’ collection revenue profile is similar to Casella’s. About 80% of collection revenues come from the residential and commercial collection lines of business, and about 7% of such revenue comes from C&D volumes. Casella said it doesn’t plan on significant capital expenditures for replacements over the initial operating period because Twin Bridges’ transfer station and MRF were both built in the last three years, and its average fleet age is about three years old.
Casella expects to generate $4 million of incremental annual synergies and benefits by its third year of operations by finding route efficiencies, internalizing waste and recycling volumes and working out other operational improvements, the company said in the release.
According to the Jeffries analysis, the Twin Bridges and GFL acquisitions are expected to generate $255 million in annualized revenues on a consolidated basis, and earn about $61 million of annualized earnings before interest, taxes, depreciation and amortization.
