Waste Management Founder Huizenga Launches Fourth Act
By Alex Sherman - Aug 20, 2010 Wayne Huizenga, who made multibillion dollar companies of Waste Management Inc. and AutoNation Inc., is back in the buy-and-build game. This time he is eyeing the $57 billion commercial cleaning business.
On Aug. 18 Huizenga said his Swisher International Inc. would merge with CoolBrands International Inc., a former purveyor of Eskimo Pie ice cream bars and other treats. Swisher, which provides cleaning services for restaurants, hospitals and other industries, will exchange its shares for about 58 million shares of CoolBrands common stock in a deal valued at about $100 million, said Don Duffy, a spokesman. CoolBrands rose 24 percent to C$2.35 ($2.24) at 4 p.m. on the Toronto Stock Exchange.
The goal is to use Coolbrand’s listing to take Swisher public. The Canadian concern sold most of its assets in 2008 while looking for a strategic partner. It still has $65 million in cash, which Swisher will tap to expand.
“This is another opportunity to build a company that will grow,” Huizenga, 72, said in a telephone interview. “Now we’ll have public capital to do acquisitions.”
He plans to build Swisher much the way he grew Waste Management, Blockbuster Inc. and AutoNation, he said.
“You go to a guy and you say, ‘Do you want to sell?’ If they think they can be a part of something that’s going to grow -- you give them some cash and some stock -- they’ll say ’yes,’” said Huizenga, who will serve as chairman. “They want the stock because they’ll think, ‘Oh boy, you guys are going to grow this business, and I’m going to watch my stock grow!’”
National Competitor
Swisher, based in Charlotte, North Carolina, generated $112 million of revenue in 2009, according to a company statement. Swisher’s main national competitor is Ecolab Inc., Huizenga said. The St. Paul, Minnesota-based company posted $2.69 billion in cleaning and sanitizing revenue over the past 12 months.
“We’re concerned about every competitor in every market, but we think we’ll continue to have the leading brand,” said Michael Monahan, vice president of Ecolab’s external relations.
He values the global market at $57 billion and says Swisher’s growth prospects are in the U.S. while Ecolab is expanding internationally. Huizenga says Swisher plans to expand overseas, too.
The gap between Swisher and EcoLab doesn’t faze Huizenga: “You get a couple of regional guys together, and you have your nationwide network.”
Steve Berrard, who has worked with Huizenga for 25 years, will serve as Swisher’s chief executive officer. CoolBrands shareholders will hold 52 percent of the new company. Berrard and Huizenga will own most of the rest.
One Truck
Huizenga is the world’s 334th richest man, according to Forbes Magazine’s 2009 rankings, with an estimated net worth of $2 billion.
In 1962, Huizenga began what would become Waste Management with one garbage truck in Fort Lauderdale, Florida.
”I had zero interest in being in the business,” he said in a 2003 interview with Waste News. ”I got into this industry by accident. I saw an ad that said ‘route for sale,’ and so I went and called that guy and bought him out.”
Huizenga built Waste Management into the industry leader before “retiring” in 1984. Prior to taking the company public in 1972, he had to overcome the perception on Wall Street that garbage disposal was controlled by the Mafia. Today, Waste Management has 475 major subsidiaries and a market capitalization of more than $16 billion.
Initially Reluctant
In 1987, Huizenga and Berrard bought into Blockbuster when it owned eight stores and had 11 franchises, according to Entrepreneur.com. Huizenga was initially reluctant to get into the video rental business, associating it with pornography, and didn’t even own a VCR. Seven years later, he and Berrard sold the business to Viacom Inc. for $8.4 billion.
Today, Blockbuster is struggling as video rentals move online. The stock closed at 15 cents yesterday and has fallen 82 percent this year as the company tries to service $920 million in debt.
In 1995, Huizenga returned to his roots, buying Republic Waste, and later transformed it into AutoNation. Huizenga rolled up one car dealership after another until AutoNation was the largest U.S. auto retailer by sales.
In late 1999, the company’s shares nosedived, as analysts claimed Huizenga’s strategy of selling multiple used-car brands in one mega-store wasn’t working. By December 2000, shares were $5, a 70 percent drop from June 1999.
‘Every Angle’
Huizenga recruited Mike Jackson from Mercedes-Benz USA to run the company in 1999, and Jackson took over as chairman and CEO in 2003 when Huizenga stepped aside. Jackson got the company back on track by cutting debt, slashing overhead and ditching underperforming stores.
One time Jackson wanted some advice from the boss, who proceeded to tackle the problem from “every angle,” Jackson said. Eventually, Jackson told Huizenga he needed a decision. “And he says, ‘That’s too easy. It’s your call,’” said Jackson. ”And I say, ‘What if I get it wrong?’ And he says, ‘Well, then you’ve got a problem.’ That’s classic Wayne.”
Huizenga acquired the Miami Dolphins in 1993 and owned the team until January 2009, when he sold 95 percent of the franchise to New York real-estate developer Stephen M. Ross. Huizenga still owns 5 percent of the team. He was also the original owner of Major League Baseball’s Florida Marlins and the National Hockey League’s Florida Panthers.
Ambivalent
His experience owning sports franchises has left him ambivalent, he said.
“I owned the Dolphins for 20 years, and every year, I’d say it was going to be better, and always something happens, whether it’s injuries or the quarterback doesn’t work out like he’s supposed to,” said Huizenga. “Every year has been a disappointment compared to expectations.”
Huizenga says he is “somewhat reinvigorated” by taking Swisher public and emphasizes Berrard will run the company.
“I’m living in Fort Lauderdale and Swisher is in Charlotte,” said Huizenga. “Sure I’m involved more than before, but I’m in a different city, so how involved can you be?”
His presence was still what ultimately convinced CoolBrands to sell after three years of rejecting nearly 70 offers, according to president and chief executive officer Michael Serruya, who will be on the Swisher board.
“When it became apparent Wayne was willing to come on as chairman and take an active role, I was sold,” said Serruya. “He’s done it three times before, and we’re betting he can do it a fourth time.”
To contact the reporter on this story: Alex Sherman in New York at asherman6@bloomberg.net and |
