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Clean Harbors (CLH) Signs Deal to Acquire Certain Vertex Assets

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Clean Harbors, Inc. (CLH) yesterday announced that it has inked a deal to purchase the used motor oil collection and re-refinery business from Vertex Energy, Inc. VTNR for $140 million in cash. Subject to U.S. regulators’ and Vertex shareholders’ approval, and other customary closing conditions, the deal is anticipated to complete in the third quarter of 2021.

Over the past year, shares of Clean Harbors have gained 51.3%, outperforming the 29.4% rise of the industry it belongs to.

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How Will Clean Harbors Benefit?

The assets to be acquired include a 69-million-gallon re-refinery in Marrero, LA; a 20-million-gallon re-refinery in Columbus, OH and 17 service branches located throughout the Midwest and the Gulf Coast, with nearly 200 employees and a fleet of collection vehicles.

These assets are expected to generate more than $100 million in annual revenues and achieve adjusted EBITDA of at least $15 million in the first full year of operations.

The deal is expected to help Clean Harbors expand its re-refining network with a plant in Louisiana and another in Ohio, increase its existing re-refining capacity by almost 40% with the addition of an annual production capacity of nearly 90 million gallons of waste oil and boost its waste oil collection capabilities, especially in the Midwest and Gulf Coast regions.

Vertex's assets, being the first re-refining operation in the Gulf Coast region, should also strengthen Clean Harbors’ competitive position in the renewable lubricants and fuels markets.

Additionally, the acquisition is expected to generate cross-selling opportunities with the company's Environmental Services segment and increase the scale of its Safety-Kleen Sustainability Solutions (“SKSS”) segment.

Alan S. McKim, chairman and chief executive officer at Clean Harbors, stated, "We believe that this transaction will generate significant value and return for our shareholders, as well as benefits to our current and prospective SKSS customers."

Zacks Rank and Other Stocks to Consider

Clean Harbors currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some other top-ranked stocks in the broader Zacks Business Services sector include Interpublic IPG, Gartner IT and Charles River CRAI, each carrying a Zacks Rank #2 as well.

Long-term (three to five years) expected earnings per share growth rate for Interpublic, Gartner and Charles River is projected at 10.2%, 13.5% and 15.5%, respectively.

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