Dive Brief:

• Waste Connections is in the process of acquiring Massachusetts-based ABC Disposal Service and affiliated operations, according to public records. ABC describes itself as "the largest independent family owned solid waste and recycling company in the Southern Massachusetts and Rhode Island market area."
• News of ABC's pending sale to an unidentified company was first reported by The Wanderer on Monday, based on comments from CEO Michael Camara at a meeting in Rochester, Massachusetts. A Dec. 17 letter obtained from the Rochester Board of Health confirms Waste Connections is the expected buyer. Camara declined to comment.
• Waste Connections did not respond to a request for comment. The company's top executives recently filed paperwork to register an entity called ABC Disposal Service Holdings in Massachusetts, a step Waste Connections has also taken before finalizing other acquisitions.

Dive Insight:

Waste Connections garnered significant attention for its 2021 acquisition of E.L. Harvey & Sons, the largest private waste company in Massachusetts at the time, and further regional expansion has been widely anticipated. The ABC operations would bring a notable combination of hauling, transfer and recycling capacity in a hotly contested market.

Affiliated company New Bedford Waste Services currently runs three transfer stations in southeastern Massachusetts, an area known for acutely tight disposal capacity. A prior company presentation said this includes a transfer station and C&D recycling facility with 1,500 tons per day of capacity in New Bedford, a transfer station with 625 tons per day of capacity in Sandwich on Cape Cod and another that can handle 890 tons per day in Rochester. 

According to The Wanderer's report from a Jan. 5 town meeting, the company is seeking state approval to increase maximum daily capacity at the Rochester facility to 1,500 tons. Pending that approval the town will also need to sign off on an update to its host community agreement with the company.

Per Camara's December letter, Waste Connections intends to make a "major investment" in new baling equipment that will triple hourly capabilities and more than double bale weights to allow for more storage capacity. "They have the resources to rapidly move waste to their out of state landfills," he wrote, adding that "their access to the trucking needed to move the trash bales out on a daily basis is unprecedented." 

Camara has long been known as a vocal proponent for greater disposal capacity in Massachusetts, criticizing the state's Department of Environmental Protection for a moratorium on new disposal facilities that has increased export activity to out-of-state facilities. Local market participants often talk about limited options and long lines at existing transfer or disposal sites as an ongoing issue.

In addition to its transfer assets, ABC was also a majority partner behind the opening of a $40 million mixed waste MRF in 2019 — through affiliate company Zero Waste Solutions — and has a large hauling presence in its region. Updated figures aren't available, but prior company materials indicate ABC services an estimated 10,000 commercial and industrial customers and over 60,000 residential customers (including municipal contracts). ABC gained notoriety within the industry for its mid-cycle attempt to raise fees for a recycling contract with the city of New Bedford in 2018, following that period's commodity market collapse, which led to a protracted back-and-forth legal fight. The company ultimately lost out following a jury's decision last September.

The pending sale of ABC would continue a growing trend of family businesses selling to larger competitors amid the industry's multiyear M&A boom. The company, named after founder Arnold B. Camara, has been operating since 1967. It's not uncommon to see such multi-decade operations selling around the country, with analysts pointing to enticing valuations and increasing pandemic fatigue as key factors.

Camara has said multiple times in recent months that he's been filling in to drive ABC trucks due to labor limitations. At the Rochester meeting he reported around 20% of employees were out due to the coronavirus in early January and the company's website also warns of "limited staffing." This has been a common issue for waste and recycling employers across the U.S. in recent weeks due to the omicron variant's surge.

Pending the sale's close, Camara's Dec. 17 letter indicates he would stay on with Waste Connections to help pursue "many more" acquisitions in the area. This would build on a run of other deals the company completed in Rhode Island in recent years and also fits with a prior statement from CEO Worthing Jackman about wanting to further expand a local market position following the Harvey transaction. The Massachusetts area has already seen heightened acquisition activity from Republic Services, WIN Waste Innovations and others in recent years, but analysts and market participants still see plenty of possibilities for further consolidation to come.

Final numbers won't be available until fourth quarter earnings reports come out next month, but investment firm Stifel recently estimated total 2021 M&A spend by the industry's top public companies could approach $3.46 billion — among the highest in recent years.

In addition to Harvey, other major deals completed by Waste Connections last year include the affiliated operations of C&S Waste Solutions in California and Nevada as well as Kahut Waste Services in Oregon. During the company's latest earnings call, Jackman said there was "a lot of runway ahead of us" for further deals in the U.S. and Canada.