2 Waste-to-Energy Firms Agree to a Combination
Wheelabrator Technologies, the nation’s largest waste-to-energy concern that is 80% owned by Henley Group of La Jolla, is forming a new enterprise with Waste Management, the country’s largest trash collection company, in a combination that will create a company with annual revenue of more than $1 billion.
The new entity, to consist of Wheelabrator Technologies and all the waste-to-energy assets of Waste Management, will operate a total of nine plants in the United States that produce electricity and steam by burning garbage. It also has more than a dozen plants in various stages of development.
The marriage of the two companies was favorably received by analysts who saw it as a potential powerhouse that will help accelerate the development of the waste-to-energy industry. At the end of 1987, 19 waste-to-energy plants were in operation in the United States, a total that is expected to grow to 54 by 1990, according to a study by Alex. Brown & Sons, a Baltimore investment firm.
Headquartered in Danvers, Mass., Wheelabrator posted 1987 revenue of $1 billion and is already the nation’s largest operator and builder of refuse-to-energy plants with eight currently in operation and a dozen in development. Four Wheelabrator plants are set to open over the next two years.
Waste Management, a trash collection giant with 1987 revenue of $2.8 billion, operates a waste-to-energy plant owned by the city of Tampa and is developing a company-owned plant in Broward County, Fla., near Ft. Lauderdale. In addition to the Tampa plant that it is contributing to Wheelabrator, Waste Management will also give it access to the 110 landfill sites it operates across the nation, the optimal sites for new refuse-to-energy sites.
Access to the sites are critical for Wheelabrator because the planning and environmental issues attendant to securing a new location for such a plant have already been dealt with, Waste Management spokesman William Plunkett said. The landfills will also provide a convenient site for disposal of ash from the plants, he said.
“The two companies will compliment each other perfectly,” said Beth Heming, an analyst with Chicago Corp. investment firm in Chicago. “Waste Management also brings to the table the collection and hauling of garbage which provides a steady stream of waste for the plants. It will be tough to beat them in the industry.”
In addition to its landfills, Waste Management has trash collection contracts with 600 municipalities in the United States, Plunkett said Thursday, more than any other U.S. waste processing company.
As part of the enterprise, Waste Management has also agreed to provide $150 million in credit support for Wheelabrator to bring the company’s credit supports to $1 billion.
The new Wheelabrator Technologies entity will be 62% owned by Henley, 23% owned by Waste Management and 15% owned by Wheelabrator Technologies’ public shareholders. Henley now owns 80% of Wheelabrator, having spun off a 20% interest in an initial public stock offering last September that raised $119 million.
The stock market reacted favorably to the announcement with each of the three companies involved rising $1 or more in Thursday trading. Henley Group closed up $1 at $23.375, Waste Management was up $1.75 at $34.125 and Wheelabrator Technologies was up $1.875 at $23.875.
