Welcome to the big time

The sabre-rattling surrounding the Macquarie acquisition of WCA is a sign that infrastructure has graduated to the mainstream of business world legal investigations

It seemed relatively pedestrian.

A Macquarie Group infrastructure investment fund, Macquarie Infrastructure Partners II (MIP II), had just paid $525 million for WCA Waste Management, a Houston company specialising in the collection as well as the disposal of…wait for it…garbage!

For Wall Street, the deal was likely not that exciting. I do not own a television, so cannot state for sure if resident CNBC M&A scoopmeister David Faber reported on the “big Macquarie-WCA acquisition”, but I would feel comfortable going out on a limb and guessing that he got the announcement and concluded it was time to hit T.G.I. Friday’s for a lite beer. 

For me, though, it was significant. Macquarie had picked up its second US waste management outfit (in 2008, it bought a North Carolina operation). Privatising a public waste management company is an interesting venture: the company, no longer subject to rigorous valuation, can go ahead with landfill, or make a purchase, without getting its stock price hammered.

To summarise the positive nature of the Macquarie-WCA deal:

1. 30 percent premium paid
2. Stock price before acquisition: $4.99
3. Stock price after acquisition: $6.50

But hold on, a legal “investigation” into the acquisition is happening.

So far, law firms Brower Piven, Bull & Lifshitz, Furaqi & Furaqi, Glancy Binkow & Goldberg, Rigrodsky & Long, Robbins Umedda, along with numerous others, are announcing their own “investigation” into the deal. 

The probes will try and 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.

This sort of legal procedure is par for the course in run-of-the-mill M&A or private equity wheeling and dealing. Want to take a guess who this type of firm is going to be targeting now? Just take a guess. Welcome to the big time, infrastructure. You have graduated to the business world mainstream. 

Most of the above-mentioned law firms declined to respond to a request for comment. I did get through to Furaqi & Furaqi attorney Juan Monteverde, however. 

“We do not comment on litigation,” Monteverde told me.

“Wait, litigation? I thought it was an investigation.”

“Same…we do not comment on either,” he said.

That Kierkegaard-like response left me confused.