John, I also think it* is great news and I'd like to reiterate why.
Laidlaw Environmental, LLE, is in a tough business, waste recycling. They make valuable commodities out of waste materials, but commodities are subject to risk of price crashing gluts. A few years ago, there was a shortage of newsprint, so manufacturers could work longer hours and cut more trees. On the other hand, a recycler of waste newsprint is faced with a constant supply and if the economy softens, the prices of commodities tends to drop, and he must pay extra to have his supply of waste materials deposed of in a landfill.
I think that in a very competitive industry with tight margins and high risk, there is a tendency for the better managed companies to take over the marginal ones. It has been argued that LLE is overpaying** for Safety Kleen, SK, another waste recycler. I want to say why I think they are willing and able to do that.***
I think LLE took over SK because it potentially creates a combination of four essential factors; capital, expertise, technology, and that equally crucial and valuable feature, government permission to operate.
I think capital comes from the parent company that split LLE off and is still a major stockholder****. The Canadian Laidlaw is in the transportation business, but has access to capital that it can use to support LLE's expansion plans.
I think LLE has the expertise to make a profit from waste recycling, and is eager to expand its business operations. SK recycles waste in the Chicago area and LLE will be able to manage that. But the reason why I think LLE paid so much for SK is that they have government permits to operate a huge waste oil recycling facility in that major feedstock supplying area.*****
We know that Safety Kleen wasn't able to profitably recycle waste oil. So why do I think SK's waste oil permits are so valuable to LLE? Because LLE is based in Columbia, SC, and must be very familiar with the GRNO story. By this time, they have become convinced that the GRNO technology works, and can see that as a major breakthrough in the technology of oil recycling. They must know that while GRNO has the technology, it lacks the other essential elements to operate; that is, capital and government permission.
I think LLE plans to absorb SK and get set up running it. Once they are comfortable with their new SK operation, they will come knocking on GRNO's door, because by that time I expect GRNO will have sold some plants, will be in the process of getting their own customers comfortable in operating their new plants, and will have wrung out any remaining bugs in their Model 1000 design. And that will be when the story will get really fascinating.
Charles
*http://www.newsalert.com/free/story?StoryId=CnqYX0b8ZtJe2ndCZmtyW&FQ=c%25LLE%20or%20%22Laidlaw%20Environmental%20Services%20Inc.%22
**https://www.siliconinvestor.com/readmsg.aspx?msgid=3673710
***http://www.newsalert.com/free/story?StoryId=CnqyAubWbtLLtudaXn&FQ=c%25LLE%20or%20%22Laidlaw%20Environmental%20Services%20Inc.%22&Title=Headlines%20for%3A%20%0A
****http://www.laidlaw.com/
*****http://www.safety-kleen.com/services.html |
