October 31, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of environmental cleanup company Clean Harbors (NYSE: CLH ) jumped 17% today, in a delayed reaction to a big acquisition.
So what: The market was closed for the last two days, so there was a delayed reaction to the company's $1.25-billion cash acquisition of Safety-Kleen that was announced Monday. The company said the acquisition will add more to Clean Harbors' growth, than save costs with synergies.
Now what: The acquisition looks to be very fairly priced, after Safety-Kleen generated $1.3 billion in revenue, and $161 billion in EBITDA last year. The complimentary companies will now be able to dominate the hazardous cleanup industry that should continue to grow as the energy space grows. I think Clean Harbors can move higher long-term, but I would be leery of buying on today's jump. A pullback in shares would be a much more attractive entry point following this acquisition.
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