Dive Brief:
- Covanta is under agreement to acquire Circon Holdings from Kinderhook, the firms announced Monday, in a deal that would be the new owner's largest acquisition in two decades.
- Circon brings more than 20 facilities into Covanta’s portfolio, including for centralized waste treatment and for treatment, storage and disposal. It also adds more than 600 employees and 2,500 customers.
- “Together we’ll continue to transform Covanta into the very best service provider for our customers’ unique environmental challenges and ESG goals,” Covanta President and CEO Azeez Mohammed said in a statement.
Dive Insight:
Covanta's acquisition of Circon allows it to enter the world of hazardous waste for the first time, a spokesperson said, advancing its agenda to broaden services.
The deal accelerates private equity-backed Covanta’s expansion into the high-paying environmental services sector and is the eighth deal for the company since being acquired by EQT Infrastructure in 2021. That deal included provisions requiring Covanta to increase its sustainably processed waste by 2.5% and its recycled or reused waste by 25% by 2025 or face financial penalties.
Covanta declined to name the price for the deal. Kinderhook began marketing Circon in February through Brown Gibbons Lang & Co. and Houlihan Lokey, and experts estimated the firm could fetch as much as $600 million, The Deal reported.
In a statement, Mohammed said the acquisition will allow Covanta to expand its geographic reach, especially in the Gulf Coast and Midwest. The addition of Circon’s services specifically doubles Covanta’s wastewater footprint while enhancing circularity, grows its engineered fuels business five-fold and catapults Covanta into a leader in the growing alternative fuels field for kilns.
"This acquisition accelerates our flightpath to becoming the premier company for sustainable materials management," Mohammed said in a release. "With Circon, we are enhancing our carbon negative solutions and bringing our offerings to the next level."
Circon, based in LaPorte, Texas, was formed in 2019 through the merger of Intergulf Corporation and STC Industrial by owner Kinderhook. The private investment firm subsequently added new acquisitions under Circon, including Water Integrated Treatment Systems in 2021. Kinderhook merged Circon with portfolio companies Chemtron and KilnDirect in July 2021.
“Kinderhook is thrilled with this outcome for Circon, its employees, and our limited partners,” Rob Michalik, managing director at Kinderhook, said in a release. “The Circon team’s vision of developing an integrated environmental solutions platform focused on sustainability came to fruition, and we are extremely proud of the result.”
Circon CEO Frank Iezzi, speaking at the Corporate Growth Conference in November, said his company was able to implement four price increases in 2022 as demand for the environmental services business took off.
Iezzi said 90% of the waste processed by his company is repurposed in some way. He said that focus on circularity has proven to be a tailwind for Circon in recent months as an increasing proportion of its industrial clients in both the hazardous and non-hazardous waste sphere look to find ways to reduce the amount of their waste that goes to landfills and find more sustainable feedstocks.
“We have these large Fortune 2000 client that don't want to send their plant waste to a landfill, and that's becoming a bigger group of people that are choosing to do that,” Iezzi said. “They're doing it because it's the right thing to do and they're under a lot of pressure to do it in the environment they operate in.”
Additional reporting by Cole Rosengren
