Waste Management, Inc. has agreed to sell Wheelabrator Technologies Inc. (WTI) to an affiliate of Energy Capital Partners (ECP) for $1.94 billion in cash.

Wheelabrator owns or operates 17 waste-to-energy facilities and four independent power-producing facilities in the United States that process over 7.5 million tons of waste and have a combined electric generating capacity of 853 megawatts. It also has four ash monofill landfills, three transfer stations and an ongoing development and construction project in the United Kingdom. During 2013, WTI generated approximately $845 million in total revenue.

In conjunction with the sale, Waste Management will enter into a long-term agreement to supply waste to certain WTI facilities upon closing.

David P. Steiner, President and Chief Executive Officer of Waste Management, said:

"This transaction aligns with our goal of driving shareholder value by maximizing our focus on our core business and reducing earnings volatility related to electricity sales. We look forward to a long-term partnership with ECP through our waste supply agreement."

"We appreciate the hard work and dedication of our Wheelabrator employees. They made our waste-to-energy business successful, and we anticipate that the business will continue to be successful under ECP's ownership."

Tyler Reeder, a Partner in Energy Capital Partners, said:

"ECP is excited about our acquisition of Wheelabrator given its excellent operating track record of critical assets, and talented and entrepreneurial employees. We believe Waste Management's strong waste supply capabilities well complement ECP's deep experience in power generation; and we look forward to continuing to provide Wheelabrator customers and partners with the same continued excellent service they have enjoyed under Waste Management's ownership."

Waste Management intends to use the net proceeds from the transaction to drive incremental shareholder value by acquiring assets related to the core business and repurchasing shares, while maintaining a strong balance sheet.

Steiner concluded:

"If we use the net proceeds solely to repurchase shares and repay debt, we expect up to two cents accretion to our 2015 diluted earnings per share. If we can identify core business acquisitions that would be more accretive than buying back shares, we will pursue those opportunities. We believe there will be core business assets available at reasonable prices that would meet our criteria. Consequently, we would expect that the use of proceeds will include a combination of accretive acquisitions, share repurchases and debt repayment."

The transaction is subject to Federal Energy Regulatory Commission (FERC) approval and other customary closing conditions, and is expected to close in late 2014.

Barclays and Centerview Partners served as financial advisors to Waste Management on this transaction.