HOUSTON -- Waste Management Inc. is adding more than a million tons to its already massive recycling operation by snatching up Greenstar Recycling LLC, which calls itself the largest private recycler in the country.
Greenstar, owned by NTR plc of Dublin, Ireland, landed in the New World in 2007, with plans to become a recycling powerhouse. Along the way, the company spent more than $300 million to create a multi-state operation.
The sale, announced Jan. 31, could be worth up to $220 million, depending on the performance of Greenstar's assets under Waste Management.
"I think this is another sign that Waste Management is taking recycling pretty darn seriously. It's a cornerstone of what we're trying to do as a company going forward," said William Caesar, president of Waste Management Recycle America, the company's recycling business.
"And these sets of assets are going to position us to not only expand our service coverage, but be able to deepen our coverage where we are already operating," he said.
Waste Management and Greenstar started talking about a possible deal last fall and decided to enter into exclusive negotiations that lead to this week's deal.
As a pure-play recycler, Greenstar handled about 1.5 million tons of material last year, a number that gives a significant boost to Waste Management's reuse totals. The solid waste management company is in the midst of a years-long push to triple the amount of recyclables it handles and wants to hit 20 million tons by 2020.
Waste Management recycled 9 million tons last year, so the Greenstar deal pushes that number over 10 million. Waste Management's overall recycling capacity also increases to about 15 million tons through the Greenstar deal.
Greenstar has locations in Akron, Ohio; Allentown, Pa.; Pittsburgh; Dallas; San Antonio; Houston; Fort Worth, Texas; Oklahoma City; Tulsa, Okla.; Des Moines, Iowa; Howell, Mich.; Kensington, Conn.; Normal, Ill.; and Monmouth County and Paterson, N.J., according to the company's website.
A majority of the material recovery facilities that Greenstar brings to Waste Management – seven of 12 – are located in Texas and Oklahoma, Caesar said. Seven of the 12 sites also are single-stream.
"Waste Management is organized into 17 different geographic business units. Probably about five years ago, Waste Management didn't own a single recycling asset in the state of Texas. And with this acquisition, the Texas-Oklahoma region, the area, will have the single largest volume of recycling in the whole company," Caesar said.
"There's always been a good fit of their assets with our business, with the footprint of our business. They've got assets in a few places where we don't have any assets. They've got assets in place where we need more assets," Caesar said.
NTR is selling off its Greenstar assets in the United States as the firm looks to focus its business on renewable energy.
"This sale makes strategic sense for us, in the context of consolidating our portfolio and allowing us to focus on our strategy of driving future growth in the renewable energy sector. NTR has built a valuable recycling platform in its Greenstar business, which is reflected in its attractiveness to WM, an industry leader," said NTR CEO Michael McNicholas said in a statement.
Waste Management paid $180 million for Greenstar and could pay up to another $40 million in 2018 if "performance criteria" are met, NTR said.