Republic to acquire ReCommunity, largest independent recycler in U.S.

Dive Brief:

Republic Services has announced plans to acquire ReCommunity Holdings, the largest independent recycling processor in the U.S., according to a press release. This covers 26 facilities across 14 states, along with multiple long-term municipal contracts.
"We believe this transaction will enable us to meet growing customer demand for recycling services, while achieving one of our key sustainability goals," said Don Slager, Republic's president and CEO in a statement. "Recycling continues to be one of the fastest growing segments of the waste stream, and our focus remains on investing in traditional recycling in select and prioritized markets where customers have demonstrated both a demand and a willingness to pay for recycling."
ReCommunity's facilities recover an estimated 1.6 million tons of recyclable commodities per year. As part of its "Blue Planet" sustainability initiative, Republic has set a goal of adding 150,000 tons or more of recycling capacity per year by 2018.

Dive Insight:

Republic currently operates 64 recycling facilities around the country that recover 2.5 million tons of recyclable commodities per year, making this a significant expansion of their capacity. Many of ReCommunity's facilities, mainly located on the eastern side of the country, are in areas where Republic already has a large presence in the market.

As indicated by Slager's statement on the deal, and previous comments, Republic has reoriented its recycling approach to focus more on contracts that minimize financial risk for the company. This recycling strategy has also meant shifting away from weight-based goals and increasing focus on longer-term contracts, such as a recent single-stream deal in Las Vegas. The company's strong earnings so far this year have been attributed in part to that approach. According to Republic's most recent earnings call, the company was already ahead of schedule on acquisition spending this year. Though as executives often say exceptions can be made for the right opportunity.

ReCommunity was created in 2011 when multiple investment firms, led by Pegasus Capital, acquired recycling assets from Casella subsidiary FCR, Inc. At that time, the North Carolina-based company had 18 facilities in nine states. Though subsequent turbulence in commodity markets, and a contentious break with the city of Ann Arbor, MI last year, have presented financial challenges.