Potential lawsuits stalk Macquarie waste deal

A number of US law firms have announced separate investigations into the $526m acquisition of waste manager WCA by a Macquarie fund. The firms, most of which have launched many similar investigations, typically target disgruntled shareholders that might oppose the deal.

Macquarie Infrastructure Partners II’s (MIP II) December acquisition of US waste manager WCA Waste Corporation has attracted intense legal scrutiny from at least nine local law firms.

The law firms have all announced separate investigations into the $526 million deal, which saw Macquarie shell out $6.50 a share for WCA – a 30 percent premium to the $4.99 closing price before the purchase was concluded. Their ostensible aim is to find out whether WCA management breached fiduciary duty via the sale and whether it shopped the company around adequately, or could have gotten a better deal.
“The investigation centres on whether WCA's board of directors adequately shopped the company to obtain the best price possible for WCA shareholders before accepting the terms of sale with MIP II,” reads a press release from law firms Briscoe Law Firm and Powers Taylor. It then appeals to disgruntled shareholders to contact the law firms to learn more about the investigation or join the lawsuit.

The statement is illustrative of similar investigations being launched by the likes of law firms Brower Piven, Bull & Lifshitz, Levi & Korsinsky, Glancy Binkow & Goldberg, Robbins Umedda, Faruqi & Faruqi and Rigrodsky & Long.

It is worth noting, however, that many of these firms regularly launch this sort of proceeding following M&A deals and other instances where a breach of fiduciary duty can be claimed. Levi & Korsinksy, for instance, announced some 36 similar investigations in December alone while Brower Piven and Bull & Lifshitz launched 18 and 12 of these processes during the last month of the year.

Infrastructure Investor tried to reach several of these firms, but could not obtain comment. A spokeswoman for Macquarie declined comment. Tony Fatjo, senior vice president for WCA in Houston, did not return a voicemail message. 

Industry personnel who spoke on background to Infrastructure Investor about the consequent would-be legal wrangling descending upon Macquarie-WCA doubted the legitimate merit of a possible lawsuit, while adding a so-called investigation is “not unusual” in a multi-million dollar private equity deal.

“It is not unusual for a law firm to find fault with a transaction – this is their business model,” said a person familiar with M&A processes. 

The transaction, set to close in the first quarter of 2012, will give Macquarie its second US-based waste management holding. The Sydney-headquartered company acquired Waste Industries, in North Carolina, in 2008.