Clean Harbors to buy longtime target Safety-Kleen for $1.25 billion

(Reuters) - Waste management company Clean Harbors Inc (CLH.N) will buy Safety-Kleen Inc for $1.25 billion to expand into the business of recycling used motor oil, two years after the privately held firm rejected its bid.

The acquisition of Safety-Kleen, which also provides environmental services to motor races including NASCAR, will help Clean Harbors expand its solvent-recycling capabilities and broaden its waste treatment services.

Clean Harbors has long been interested in Safety-Kleen, a competitor and customer whose chemical services business it bought a decade ago.

Norwell, Massachusetts-based Clean Harbors in 2010 proposed to buy Safety-Kleen for $13 per share but the company sought more than $20 per share.

The latest offer equates to $24.50 per share based on Safety-Kleen's outstanding shares as of August 31.

Safety-Kleen, which in August filed to raise up to $400 million from an initial public offering, counts Highland Capital Management, Contrarian Capital Management, JPMorgan Chase and GSC Acquisitions Holdings, as its top four investors.

"Safety-Kleen services over 200,000 customer locations, and we envision substantial cross-selling opportunities with its extensive customer base," Clean Harbors Chief Executive Alan McKim said.

Safety-Kleen, which had revenue of $1.3 billion last year, owns an oil re-refinery in Indiana and a re-refinery near Kitchener, Ontario. It operates a fleet of more than 2,300 vehicles and 1,000 rail cars.

The company collects and processes about 200 million gallons of used oil annually.

There are 900 million gallons of used oil in the United States that can be captured, while government and regulatory pressure to increase re-refining has boosted the business.

Clean Harbors expects the all-cash deal, its biggest to date, to immediately add to earnings, excluding one-time fees and costs.

The company said it has received financing commitment from Goldman Sachs Bank USA but is also considering options that may include a combination of existing cash, debt and equity.

Credit Suisse served as the lead financial adviser to Safety-Kleen.

Clean Harbors's shares, which have fallen 14 percent in the last 12 months, closed at $49.44 on the New York Stock Exchange on Friday.

(Reporting by Swetha Gopinath in Bangalore; Editing by Sriraj Kalluvila)