On June 21, 2017, the United States District Court for the District of Delaware issued a Judgment and Order in a civil antitrust lawsuit seeking to block the proposed $367 million acquisition of Waste Control Specialists LLC by EnergySolutions.
The United States of America is the plaintiff in the case. The listed defendants include EnergySolutions, Inc.; Rockwell Holdco, Inc.; Andrews County Holdings, Inc.; and, Waste Control Specialists LLC.
In its order, the district court entered judgment in favor of the plaintiffs and against the defendants, specifically enjoining and restraining the defendants “from carrying out the acquisition of Waste Control Specialists LLC by EnergySolutions, Inc. as memorialized in the merger agreement between Rockwell Holdco, Inc. and Andrews County Holding, Inc. dated November 18, 2015 and any amendments thereto.”
The case—which is listed as United States of America v. EnergySolutions, Inc.; Rockwell Holdco, Inc.; Andrews Country Holdings, Inc.; and, Waste Control Specialists—can be found under civil docket number 16-1056-SLR in the United States District Court for the District of Delaware.
EnergySolutions’ Press Release
Following release of the district court’s decision, EnergySolutions issued a press release that states as follows:
EnergySolutions, Inc., a wholly owned subsidiary of Energy Capital Partners, LLC (ECP) today announced that the U.S. District Court for the District of Delaware issued a decision prohibiting the sale of Waste Control Specialists (WCS) to EnergySolutions.
“We believe this acquisition was in the best interest of the long-term waste disposal needs for the nuclear industry, so we are disappointed with today’s decision that prevents EnergySolutions from acquiring Waste Control Specialists,” said David Lockwood, President and CEO of EnergySolutions.
The judge’s decision follows a two-week trial that resulted from the U.S. Department of Justice filing a lawsuit to prevent the acquisition.
Lockwood added, “While this acquisition would have added a Class B and C Low-Level Radioactive Waste disposal facility to our portfolio, we remain confident in our capability as a company to lead the industry in radioactive waste management and decommissioning. We look forward to working with WCS to best serve the interests of our customers.”
For additional information, please contact Mark Walker at mwalker@energysolutions.com or at (801) 231-9194.
Department of Justice’s Press Release
Following release of the district court’s decision, the U.S. Department of Justice (DOJ) issued a press release that states as follows:
Senior Judge Sue L. Robinson of the U.S. District Court for the District of Delaware today ruled in favor of the Justice Department’s civil antitrust lawsuit to block radioactive waste disposal provider EnergySolutions’ $367 million acquisition of rival Waste Control Specialists. Judge Robinson entered an order ruling in favor of the United States and enjoining the merger.
“Substantial evidence showed that head-to-head competition between EnergySolutions and Waste Control Specialists led to better disposal services at lower prices,” said Acting Assistant Attorney General Andrew Finch of the Justice Department’s Antitrust Division. “Today’s decision protects competition in an industry that is incredibly difficult to enter. While EnergySolutions’ preference was to buy its main rival rather than continue to compete to win business, today’s decision ensures that customers will benefit from the competitive process.”
The Court’s decision follows a 10-day trial that concluded in May. The Justice Department filed suit in November 2016, alleging that the proposed acquisition would combine the two most significant competitors for the disposal of low-level radioactive waste available to commercial customers in 36 states, the District of Columbia and Puerto Rico.
Background
Proposed Acquisition On November 19, 2015, in separate press releases, it was announced that Rockwell Holdco had signed a definitive agreement to acquire Waste Control Specialists—a wholly owned subsidiary of Valhi, Inc. and operator of a low-level radioactive waste disposal facility located in Andrews County, Texas. (See LLW Notes, November/December 2015, pp. 20-21.) Rockwell Holdco is the parent company of EnergySolutions—which operates low-level radioactive waste disposal facilities in Tooele County, Utah and Barnwell, South Carolina. Rockwell Holdco is owned by Energy Capital Partners, a private equity firm focused on investing in North America’s energy infrastructure.
According to the companies’ press releases, upon closing, Rockwell Holdco would pay $270 million in cash and $20 million face amount in Series A Preferred Stock. In addition, Rockwell Holdco would assume approximately $77 million of Waste Control Specialists’ debt, as well as all financial assurance obligations related to the Waste Control Specialists’ business.
The Valhi Board of Directors and the Rockwell Holdco Board of Directors previously approved the purchase agreement. However, completion of the sale—which was originally expected to close in the first half of 2016—was subject to certain customary closing conditions as outlined in the transaction agreement. In the meantime, EnergySolutions and Waste Control Specialists continued to operate as independent companies.
Antitrust Lawsuit On November 16, 2016, the DOJ filed a civil antitrust lawsuit in the U.S. District Court for the District of Delaware seeking to block the proposed $367 million acquisition of Waste Control Specialists by EnergySolutions. (See LLW Notes, November/December 2016, pp. 25-26.) DOJ argued that the proposed transaction “would combine the two most significant competitors for the disposal of low level radioactive waste … available to commercial customers in 36 states, the District of Columbia and Puerto Rico.”
DOJ asserted that the proposed transaction “would deny commercial generators of … [low-level radioactive waste] —from universities and hospitals working on life-saving treatments to nuclear facilities producing 20 percent of the electricity in the United States—the benefits of vigorous competition that has led to significantly lower prices, better service and innovation in recent years.”
“Since opening its … [low-level radioactive waste] disposal facility in 2012, Waste Control Specialists has provided EnergySolutions the only real competition it has ever faced,” said Acting Assistant Attorney General Renata Hesse of the DOJ’s Antitrust Division. “This competition has allowed customers to extract better prices and to receive better and more innovative service in the … [low-level radioactive waste] disposal industry. If consummated, EnergySolutions’ proposed acquisition of Waste Control Specialists would make EnergySolutions the only option for customers in nearly 40 states. And this at a time when projects worth billions of dollars are set to be awarded in the coming years.”
At the time of the filing of the lawsuit, DOJ contended that Waste Control Specialists provides the “only true competition” for EnergySolutions. “That competition has led to increased innovation and lower prices for customers,” contended DOJ.
“EnergySolutions’ acquisition of Waste Control Specialists would eliminate that competition, with no likelihood of new entry to fill the void.”
Low-Level Radioactive Waste Low-level radioactive waste is the radioactive byproduct of nuclear power generation, scientific research and certain medical treatments. Low-level radioactive waste includes such items as personal protective clothing, tools, water purification filters and resins, hardware from nuclear power plants, and equipment from medical and research institutions. Low-level radioactive waste may only be disposed of in a facility licensed by, or pursuant to an exemption provided by, the U.S. Nuclear Regulatory Commission (NRC) or a state acting under an agreement with the NRC. Low-level radioactive waste disposal is an essential service for operating nuclear reactors, research laboratories and medical facilities. Additionally, low-level radioactive waste disposal is a requirement for the safe decommissioning of such facilities when they reach the end of their useful lives.
EnergySolutions offers customers a full range of integrated services and solutions, including nuclear operations, characterization, decommissioning, decontamination, site closure, transportation, nuclear materials management, processing, recycling, and disposition of nuclear waste, and research and engineering services across the nuclear fuel cycle.
Waste Control Specialists operates a West Texas facility for the processing, treatment, storage and disposal of a broad range of low-level radioactive and hazardous wastes.
For additional information about EnergySolutions, please contact Dan Shrum at (801) 649-2000 or at dshrum@energysolutions.com or go to the company’s web site at www.energysolutions.com.
For additional information about Waste Control Specialists, please contact Rodney Baltzer at (972) 450-4235 or at rbaltzer@valhi.net or visit the company’s web site at www.valhi.net.