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Carlyle to Purchase Recycler Synagro for $462 Million

By Brett Cole

Jan. 29 (Bloomberg) -- Carlyle Group, manager of the biggest U.S. buyout fund, plans to acquire waste recycler Synagro Technologies Inc. for $462 million as demand for water cleanup increases.

Carlyle will buy all of Houston-based Synagro's shares for $5.76 each in cash, a 29 percent premium over the closing price on Jan. 26, the Washington-based firm said in a statement today. The transaction including the assumption of $310 million in debt is valued at $772 million.

Synagro, which serves 600 municipal and industrial water and wastewater treatment customers in 37 states, hired Lehman Brothers Holdings Inc. six months ago to find a buyer and Carlyle offered the highest price in an auction, Chief Executive Officer Robert Boucher said. Synagro focuses on an $8 billion market and had revenue of $338 million in 2005, up 24 percent since 2002.

``Given the size of our company and the expense of being a public company, going private made the most sense,'' Boucher said in a telephone interview.

Private equity firms such as Carlyle announced a record of more than $700 billion acquisitions last year, and are increasingly finding many public company CEOs wanting to sell to them.

Pressures related to publishing quarterly earnings reports and the Sarbanes-Oxley Act that changed financial reporting requirements following a series of accounting scandals have been a boon for buyout firms, Blackstone Group LP CEO Steve Schwarzman said in a speech in Philadelphia this month.

Synagro's stock had gained 2.5 percent in the past year before today, compared with a 12 percent rise in the Standard & Poor's 500 Index. The shares rose $1.27 to $5.75 at 12:51 p.m. New York time in Nasdaq Stock Market composite trading.

Infrastructure Team

Carlyle formed an infrastructure management team last year to acquire airports, bridges, ports, stadiums and water treatment plants in takeovers valued at as much as $1 billion. The firm appointed Robert Dove, a former executive vice president at Bechtel Enterprises, and Barry Gold, a former co- head of the structured finance group at Citigroup Inc., as the co-heads of the team.

``We are firmly committed to making the capital expenditures necessary to ensure Synagro continues to grow its business and provide the high level of reliability and customer service for which it is known,'' Dove said in a statement.

Carlyle spokesman Chris Ullman said the firm would make no additional comment.

Synagro was also advised by Locke Liddell & Sapp to sell itself while Merrill Lynch & Co. and Gibson Dunn & Crutcher advised Carlyle. The buyout firm raised a $7.85 billion U.S. buyout fund in 2005 and is seeking as much as $15 billion for its latest fund.

Last Updated: January 29, 2007 13:01 EST