Covanta – EQT Infrastructure’s latest USD5.3bn green energy deal

Sustainable waste

Sweden-based investment firm EQT’s infrastructure division has agreed to acquire Covanta Holding Corporation, whose business focuses on sustainable waste processing and advancing transitions to a circular economy in North America.

Shareholders will receive USD20.25 in cash per share in the deal valued at USD5.3 billion – as first reported on Wednesday – including the assumption of Covanta’s net debt obligations. It represents a 37 percent premium to its price on 8th June.

The deal follows on from EQT’s announcement that it is buying renewable power generator Cypress Creek Renewables earlier in July. This green energy-focused deal is to be completed via the EQT Infrastructure Fund V, and is expected to help Covanta's growth outside of the US, as well as domestically.  

Barclays served as lead financial advisor to EQT Infrastructure and Kirkland & Ellis LLP served as legal counsel in connection with the transaction. Credit Suisse and TD Securities also served as financial advisors to EQT Infrastructure.

Covanta's process reduces waste volumes by 90 percent; eliminates nearly one ton of greenhouse gases equivalent per tonne of municipal solid waste; produces sustainable, highly reliable electricity, capacity, and steam for utilities and industrial customers; and recycles metals found within municipal solid waste.

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

Headquartered in New Jersey, Covanta has 41 WtE facilities located in cities across the US, Canada and Europe. The company and its nearly 4,000 full time team members convert around 21 million tons of waste into sustainable, reliable electricity and produce around 600,000 tonnes of recycled metals per year.

The company has shifted towards waste-to-energy concurrently with the growth in renewable energy, and is expected to generate adjusted EBITDA of around USD 460mm to 480mm in 2021.