On the surface, industrial waste management doesn't seem very compelling, sounding like little more than trash collection for big firms.
But it's much more complicated than that, encompassing things like innovative waste management and environmental services in the oil fields and at automotive plants, and the sector's top performers are attracting attention.
The latest evidence: south of the U.S. border, Waste Connections Inc. just struck a deal to buy R360 Environmental Solutions for $1.3-billion (U.S.). The acquirer is mostly focused on traditional waste collection and recycling services, while the target specializes in oil field waste, performing tasks such as disposing of crude storage-tank sludge.
Here in Canada, Newalta Corp., our largest publicly traded specialty waste company, isn't about to be taken over – at least not that we know of – but its shares are certainly coveted. Since January the stock is up 17 per cent, and the company has climbed more or less steadily since its March, 2009, lows with only a few small dips here and here.
Provided that acquirers don't think it's too expensive, keep on the lookout for what happens to Newalta. Analyst Rupert Merer at National Bank Financial said the firm may also look attractive to Waste Connections, if it really wants to expand in specialty waste, or it could also catch the eye of Waste Management and Republic Services, both of which are looking to expand without triggering competition concerns.
As a sign of how appreciated the specialty waste sector is, note that Waste Connections, the latest acquirer, climbed 10 per cent on Monday – a rare rise for the buyer in any takeover.