Littlejohn & Co. has agreed to sell HydroChemPSC, a provider of industrial cleaning and environmental services, to publicly traded Clean Harbors for $1.25 billion in cash.
HydroChemPSC (HPC) is a provider of industrial cleaning, specialty maintenance and utilities services to the petrochemical and other energy-related end-markets. Specific services include hydroblasting, reactive and non-reactive chemical cleaning, wet and dry vacuuming, hydro and pneumatic excavating, and storm drain and electrical manhole cleaning.
HPC, led by CEO Brad Clark, is headquartered near Houston in Deer Park, Texas and has more than 5,500 employees, 90 facilities, 240 service locations, and customers in all 50 states.
“Littlejohn is an experienced, hands-on investor and has been an invaluable partner in supporting HPC and positioning us to execute on our strategy,” said Mr. Clark. “Their operational expertise has been instrumental as we transformed the business, invested in technology and innovation designed to enhance the customer experience, productivity and safety, and extended our leadership.”
Revenues for HPC are estimated to be $744 million in 2021, with full-year adjusted EBITDA of approximately $115 million. Based on a purchase price of $1.25 billion this equates to an EBITDA valuation multiple of 10.9x. Clean Harbors estimates that it can achieve cost synergies of $40 million from the acquisition after the first full year of operations, which would equate to an EBITDA valuation multiple of 8.1x.
Littlejohn first invested in HydroChemPSC when it acquired PSC Industrial Holdings from Lindsay Goldberg in December 2014. In October 2017, PSC added on with the buy of Aquilex Holdings, the owner of HydroChem and a portfolio company of Centerbridge Partners, and the combined company was renamed HydroChemPSC. During Littlejohn’s ownership term, the company closed four other add-on acquisitions; expanded its engineered services business unit and launched a new specialty mechanical services business unit; and invested in technology to improve worker safety, productivity, and data analytics capabilities.
“HydroChemPSC is emblematic of Littlejohn’s approach to building great businesses,” said Michael Kaplan, a managing director at Littlejohn. “We are incredibly proud of our partnership with HPC and of what we accomplished by collaborating with the company’s exceptional management team to invest in organic growth and technology, and execute strategic M&A.”
Greenwich, Connecticut-based Littlejohn invests from $50 million to $250 million of equity in middle-market companies that have annual revenues of $100 million to $800 million. The firm invests across a range of industries including manufacturers, distributors, and service providers.
Clean Harbors (NYSE: CLH), the buyer of HydroChemPSC, is a provider of environmental and industrial services, including hazardous waste disposal for Fortune 500 companies, small waste generators and federal, state, provincial and local governments. The company has more than 400 service locations in North America including over 50 hazardous waste management facilities in 38 states, 7 Canadian provinces, Mexico and Puerto Rico. Clean Harbors, led by Chairman and CEO Alan McKim, has annual revenues of just over $3 billion and is headquartered south of Boston in Norwell, Massachusetts.
Moelis & Company was the financial advisor to HydroChemPSC. This transaction is expected to close before the end of the year.
© 2021 Private Equity Professional | August 6, 2021
