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Harsco (HSC) to Buy Stericycle's Environmental Solutions

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Harsco Corporation HSC recently announced that it has signed a definitive deal with Stericycle, Inc. SRCL to buy its Stericycle Environmental Solutions Business (“ESOL”). Notably, the $462.5 million deal is subject to regulatory approvals and customary closing conditions.

ESOL is a leading provider of a wide range of disposal solutions to several markets, including industrial, retail and healthcare. Also, the company is engaged in offering transportation services with the help of its strong logistics network.

Upon completion of the deal, ESOL will be merged with Harsco’s Clean Earth business, a major specialty waste processor in the United States.

Rationale Behind the Acquisition

Harsco believes the acquisition will enable it to enhance service capabilities and offerings to its customers across the industrial waste value chain. Also, the complementary waste management portfolios and ESOL’s strong customer base will support Harsco in expanding its market share in the hazardous waste services industry.

As noted by the company, the buyout is likely to be accretive to its revenue growth on the back of scale advantages, expanded customer base, and cross-selling opportunities. The combined business is also likely to generate about $15 million of run rate cost synergy savings in the third year of completion.

Zacks Rank & Price Performance

Harsco, which has a market cap of roughly $1.1 billion, currently carries a Zacks Rank #5 (Strong Sell).  In the past six months, the company’s shares have lost 21% against the industry’s growth of 5.2%.

Also, analysts have become increasingly bearish on the company over the past 30 days. Consequently, its earnings estimates for 2019 (results are awaited) have decreased from $1.41 to $1.17 on account of one downward estimate revision versus none upward.

Stocks to Consider

A couple of better-ranked stocks from the Zacks Industrial Products sector are Graco Inc. GGG and Barnes Group, Inc. B. While Graco sports a Zacks Rank #1 (Strong Buy), Barnes Group carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Graco delivered positive earnings surprise of 0.40%, on average, in the trailing four quarters.

Barnes Group pulled off positive earnings surprise of 4.21%, on average, in the trailing four quarters.

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