Compass Diversified Holdings has acquired its second environmental clean up company in less than a month. Compass said it had acquired Clean Earth Holdings, Inc. for $253 million, which it is paying for with a combination of cash and a draw of $95 million on its revolving credit facility.
Compass raised roughly $200 million in the last year by divesting about half its stake in Fox Factory
Holding Corp., but still controls about 41 percent
of the company, which makes high performance supsension products for
mountain bke and off-road vehciles. Compass also owns controlling stakes
in CamelBak, Ergobaby and Liberty Safe.
The purchase price for Clean Earth was based on a total enterprise value of $243 million and included $9.9 million of cash and working capital adjustments. Acquisition related costs were approximately $1.9 million. CODI’s initial common equity ownership in Clean Earth as a result of this transaction is approximately 98% on a primary basis. In addition to its equity investment in Clean Earth, CODI provided loans totaling $146.3 million to Clean Earth as part of the transaction. Clean Earth’s management invested alongside CODI and owns the remaining 2 percent.
Headquartered in Hatboro, Pennsylvania, Clean Earth provides environmental services for a variety of contaminated materials including soils, dredged material, hazardous waste and drill cuttings. The company analyzes, treats, documents and recycles waste streams generated in multiple end-markets such as power, construction, oil and gas, infrastructure, industrial and dredging. Treatment includes thermal desorption, dredged material stabilization, bioremediation, physical treatment/screening and chemical fixation. Before the company accepts contaminated materials, it identifies a third party “beneficial reuse” site such as commercial redevelopment or landfill capping where the materials will be sent after they are treated. In 2013, Clean Earth managed and treated 3.4 million tons of material, of which 98 percent was beneficially reused.
The company holds the largest market share in the contaminated materials and dredged material management market and operates 12 permitted facilities in the Eastern U.S. For the year ended December 31, 2013, Clean Earth reported revenue of approximately $155.9 million. The company is expected to provide approximately 28 to 32 cents per share of cash flow accretion to CODI on a full year basis.
