Waste Management has decided to sell the Wheelabrator Technologies to an affiliate of Energy Capital for $1.94 billion.
Upon closing, Waste Management will enter into a long-term agreement to supply waste to WTI facilities.
In 2013, WTI generated approx $845 million in total revenue.
The total proceeds from the transaction will be used to acquire assets related to the core business and repurchasing shares by maintaining a good balance sheet.
The transaction will close in late 2014, which is subject to Federal Energy Regulatory Commission (FERC) approval.
David P. Steiner, president, CEO, Waste Management, said, “This transaction aligns with our goal of driving shareholder value by maximizing our focus on our core business and reducing earnings volatility related to electricity sales. We look forward to a long-term partnership with ECP through our waste supply agreement.”
If all the net proceeds are used to repurchase shares and to repay debt, up to two cents accretion to 2015 diluted earnings per share can be gained. If core business acquisitions are found more accretive than buying back shares, that opportunity will be pursued. There will be core business assets available at reasonable prices that would meet the criteria and the use of proceeds will include accretive acquisitions, share repurchases and debt repayment, Steiner concluded.
Wheelabrator, US, has 17 waste-to-energy plants and four power-producing facilities. These plants have 7.5 million tons waste processing capacity and a combined electric generating capacity of 853 MW. In addition they have plants in UK also.
The firm possess good operating track record of critical assets including entrepreneurial employees. The strong waste supply capabilities of Waste Management will be complementing ECP’s experience in power generation, said Tyler Reeder, partner, Energy Capital.
Barclays and Centerview Partners acted as the financial advisers for Waste Management on this transaction.