LAKE FOREST (dpa-AFX) - Stericycle Inc. (SRCL) Wednesday said it has agreed to buy paper-shredding service provider Shred-it International for $2.3 billion in cash.
Stericycle, which is involved in medical waste management business, said the acquisition of Shred-it will enhance growth opportunities and expand its services portfolio. The company expects the acquisition to be accretive to cash earnings by at least 10 percent in 2016 and in the mid-to-high teens in 2018.
The acquisition is expected to close in the fourth quarter of 2015, subject to regulatory approvals. Stericycle plans to fund the deal through a combination of cash, debt and $700 million in equity or an equity-linked offering.
Shred-it provides document shredding and secure hard drive destruction services to over 400,000 customer locations in 15 countries. Shred-it's pro forma revenue for the 12-month period ending March 2015 was $726 million.
According to Bloomberg, Oakville, Ontario-based Shred-It had planned to raise about C$600 million in an initial public offering.
Stericycle CEO Charlie Alutto said, 'By combining Shred-it with our business-to-business compliance solutions, we are providing the marketplace with a broader portfolio of services.'
Separately, Cintas Corp. (CTAS) said it has agreed to sell its investment in Shred-it International Inc. to Stericycle for consideration of about $550 million to $600 million before taxes.
SRCL closed Wednesday's trading at $134.56, down $0.60 or 0.44%, on the Nasdaq. The stock, however, gained $5.44 or 4.04% in the after-hours trade.
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