Sweden’s EQT taking U.S. waste manager Covanta private in $5.3 billion deal

Sweden’s EQT taking U.S. waste manager Covanta private in $5.3 billion deal

STOCKHOLM (Reuters) – Covanta Holding Corporation is to be taken private by Sweden-based investment firm EQT, with the U.S. waste management firm valued at $5.3 billion including debt in Wednesday’s announcement.

The deal, to be completed by EQT Infrastructure Fund V, is expected to aid Covanta’s expansion, including outside of the United States, according to separate statements.

Having started in the 1980s in waste management, Covanta has increasingly pivoted towards waste-to-energy as the push for renewable energy sources has grown. The Morristown, New Jersey-based firm has 41 such power facilities in the United States, Canada and Europe.

Waste-to-energy also has benefits including limiting the amount of garbage placed into landfills, at a time when space is constrained and such sites are being identified as heavy generators of the potent greenhouse gas methane.

Alex Darden, partner in EQT Infrastructure’s advisory team, said the acquisition aligned with EQT’s “thematic approach of investing in sustainable businesses that have a positive impact on society”.

It is the second U.S. green energy acquisition the firm has announced this month. On July 3, EQT said it was buying renewable power generator Cypress Creek Renewables.

Covanta shareholders will receive $20.25 in cash for each share, a 37% premium to its price on June 8, when media reports of a Covanta sale process surfaced. The deal values Covanta’s equity at $2.7 billion, according to Reuters calculations.

The investment company said in its statement that with the transaction, due to close by year-end, the EQT Infrastructure V fund was expected to be 50-55% invested.

Covanta has about 4,000 staff and is expected to generate adjusted operating profit (EBITDA) of around $460 million to $480 million this year, EQT said. As well as energy generation, Covanta produces around 600,000 tons of recycled metals per year

EQT was advised by Barclays PLC and law firm Kirkland & Ellis, with Covanta assisted by Bank of America Corp and Debevoise & Plimpton LLP.

Reporting by Helena Soderpalm; editing by Niklas Pollard and Elaine Hardcastle at Reuters: