(Adds details, background, Q2 results, shares)
July 29 Waste Management Inc said it
would sell its waste-to-energy unit to private equity firm
Energy Capital Partners for $1.94 billion in cash, to focus on
its larger solid waste business.
The company, which also reported a better-than-expected
quarterly profit, said it would use proceeds from the sale of
Wheelabrator Technologies Inc to acquire other businesses, buy
back shares and repay debt.
Waste Management shares were up 1.8 percent at $44.69 in
Wheelabrator Technologies Inc - which operates waste
combustion plants to produce clean, renewable energy - generated
only about $845 million of Waste Management's total revenue of
$13.98 billion in 2013.
The company expects earnings to rise by up to 2 cents per
share if it uses the deal's proceeds only for share repurchase
and debt repayment, Chief Executive David Steiner said.
"If we can identify core business acquisitions that would be
more accretive than buying back shares, we will pursue those
The deal will also help reduce earnings volatility related
to electricity sales, Steiner said.
Wheelabrator Technologies' 17 waste-to-energy plants and
four power-producing facilities in the United States process
more than 7.5 million tons waste and can generate up to 853
Waste Management's larger solid waste business provides
collection, transfer, recycling and resource recovery, and
disposal services to commercial, residential and industrial
Net income attributable to Waste Management fell to $210
million, or 45 cents per share, for the second quarter ended
June 30 from $244 million, or 52 cents, a year earlier.
Excluding items, the company earned 60 cents per share.
Revenue rose 1 percent to $3.56 billion.
Analysts on average had expected earnings of 59 cents per
share, on revenue $3.61 billion, according to Thomson Reuters
Waste Management said it expects adjusted earnings of
$2.30-$2.35 per share in 2014, compared with analysts' average
estimates of $2.36.
Barclays and Centerview Partners served as financial
advisors to Waste Management on the deal, expected to close
later this year.
(Reporting by Ankit Ajmera in Bangalore; Editing by Saumyadeb
Chakrabarty and Joyjeet Das)