October 7, 2014
Waste Management Inc., with aPriori Capital Partners L.P., has agreed to buy Deffenbaugh Disposal Inc. for an undisclosed amount.
The Kansas City, Kan.-based Deffenbaugh is one of the largest waste and recycling haulers in the Midwest. The privately held firm has about $180 million in sales and could represent a $450 million deal, estimated Michael E. Hoffman, managing director for the St. Louis-based investment firm Stifel, Nicolaus & Co. Inc., earlier this year.
A subsidiary of Waste Management will buy the outstanding stock of Deffenbaugh, according to the definitive agreement. Waste Management expects the transaction to close in the next several months, subject to government review and other closing conditions, according to a news release.
Deffenbaugh collected more than 1.7 million tons of waste and recyclable material, with the majority processed at its recycling facilities or disposed of at its landfills. The company employs about 1,000. It provides waste and recycling service for the Kansas City metropolitan area; Omaha, Neb.; St Joseph, Mo.; and Topeka, Kan., as well as in northwest Arkansas. In addition to those hauling businesses, the company operates one municipal solid waste (MSW) landfill, one construction and demolition (C&D) landfill, two material recovery facilities (MRFs) and seven transfer stations.
“This proposed acquisition aligns perfectly with our goal of driving shareholder value by maximizing our focus on our core business,” said David Steiner, president and CEO of Waste Management. “It affords us the opportunity to expand our service offerings to residential, commercial and industrial customers in Kansas, Missouri, Nebraska and Arkansas and enter an attractive market – Kansas City – where we currently have very limited presence.
“It also allows us to replace a portion of the earnings and cash flow from our pending divestiture of Wheelabrator Technologies Inc. at an attractive price, while preserving our strong balance sheet. Deffenbaugh’s management team runs a terrific business, and the company’s employees operate it superbly. I am confident that the addition of Deffenbaugh to our operations will create years of shareholder value, additional benefits for customers in the region and opportunities for the employees of both companies to learn and grow from each other’s operational, customer service and community involvement expertise.
Deffenbaugh has long been identified as an acquisition target. “This is an exciting day for Deffenbaugh,” said Jim Donahue, Deffenbaugh president and CEO. “Today’s announcement is a testament to our strong business operation, deep community engagement and the hard work of our employees. I speak for all of us at Deffenbaugh when I say we are excited to be joining forces with Waste Management, the largest and most respected name in the industry.”
Deffenbaugh during the past five years has modernized its fleet, improved operations efficiency and expanded its footprint. “We are proud to have partnered with the team to build a world-class business,” said Susan Schnabel, board member and Co-Managing Partner at aPriori Capital, a buyout fund advisor based in Concord, Mass.
Stifel is serving as exclusive financial advisor to Deffenbaugh in the transaction.