(Reuters) - Waste Connections Inc WCN.N will buy privately held R360 Environmental Solutions Inc for about $1.3 billion to expand its oilfield waste management services.
Municipal Solid Waste (MSW) volumes have been under pressure in a weak U.S. economy, forcing waste management companies to look at alternative sources to boost revenue.
"While a tepid economy has impacted MSW volumes, increased drilling activity in unconventional areas is fueling impressive organic growth within the exploration and production (E&P) waste sector," Ronald Mittelstaedt, chief executive of Waste Connections, said in a statement.
The deal provides Waste Connections with access to several active natural resource producing areas in the United States, including the oil-rich Permian, Bakken and Eagle Ford Basins, and adds to its exploration and production (E&P) facility in Southwest Louisiana.
Waste Connections, which provides solid waste collection, transfer, disposal and recycling services, expects the deal to close in the fourth quarter.
The deal is expected to add more than 400 basis points to Waste Connections' consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, Mittelstaedt said.
R360 Environmental Solutions, which provides recovery and disposal services in the United States, operates 26 facilities and has annual revenue of about $300 million.
Waste Connections shares closed at $29.67 on Friday on the New York Stock Exchange.
Reporting by Kartick Jagtap in Bangalore; Editing by Akshay Lodaya and Sriraj Kalluvila