DEFA14A: Enviri Sells Clean Earth for $3.04B, Spins Off Harsco Environmental & Rail

Enviri Corporation announces the sale of its Clean Earth business to Veolia for $3.04 billion in cash and a taxable spin-off of its Harsco Environmental and Rail businesses to shareholders, who will receive $14.50-$16.50 per share plus stock in the new entity.

Summary

• Enviri Corporation (NYSE: NVRI) has entered into definitive agreements with Veolia Environnement S.A. for the sale of its Clean Earth business for an aggregate cash consideration of $3.04 billion.
• Enviri shareholders are expected to receive cash consideration of $14.50 $16.50 per share and will retain full ownership of the Harsco Environmental and Harsco Rail businesses through a taxable spin-off into a new standalone publicly traded company, 'New Enviri'.
• The transaction is structured as a taxable spin-off of New Enviri to shareholders, followed immediately by a sale of Clean Earth to Veolia by shareholders, and is expected to result in minimal cash tax expense at the corporate level.
• Enviri intends to repay approximately $1.35 billion of existing debt, resulting in a conservatively capitalized New Enviri with a projected net debt to Adjusted EBITDA of approximately 2.0x and an undrawn revolving credit facility.
• New Enviri is anticipated to have approximately 28 million shares outstanding upon close, with central corporate costs 'right-sized'.
• Russell Hochman, Enviri's Senior Vice President, General Counsel, Chief Compliance Officer, and Corporate Secretary, has been appointed to the additional role of President and Chief Operating Officer, effective immediately, and will become Chief Executive Officer of New Enviri upon the effective date of the separation.
• The transaction has been unanimously approved by the Boards of Directors of both Enviri and Veolia and is expected to close mid-2026, subject to Enviri shareholder approval and customary regulatory approvals.

Sentiment

Score: 8

Explanation: The transaction is highly positive for shareholders, offering a substantial cash premium over the recent unaffected stock price and creating a more focused, financially stable New Enviri. Management comments are optimistic about future value creation for the spun-off businesses, despite some inherent risks in the rail segment.

Positives

• The sale of Clean Earth for $3.04 billion in cash is a significant step in realizing Enviri's 'sum-of-the-parts value' for shareholders.
• Enviri shareholders are expected to receive substantial cash consideration of $14.50 $16.50 per share, which is significantly higher than Enviri's unaffected stock price of $8.63 on August 4, 2025.
• Shareholders will retain full ownership of the Harsco Environmental and Harsco Rail businesses through the spin-off, allowing them to benefit from future value creation in these segments.
• New Enviri will emerge with a strengthened balance sheet, featuring approximately 2.0x net debt to Adjusted EBITDA, providing enhanced financial and strategic flexibility.
• New Enviri will have a 'right-sized' corporate cost structure, which should improve its operational efficiency.
• Harsco Environmental is well-positioned for significant upside from steel market recovery and has meaningful margin growth potential.
• Harsco Rail is at a strategic inflection point, phasing out loss-making Engineered-to-Order (ETO) contracts, with project cash flows expected to turn positive in 2027.
• The transaction is structured to be tax-efficient, with minimal cash tax expense expected at the corporate level.

Negatives

• The spin-off of New Enviri to shareholders is a taxable distribution of Spinco Common Stock.
• New Enviri will operate with a smaller size and more limited resources compared to the combined Enviri Corporation prior to the transaction.
• Harsco Rail has historically faced profitability and cash flow challenges from large European engineered-to-order (ETO) rail contracts, with expected cash consumption of ~$30M-$35M in 2025 and 2026.
• New Enviri's businesses are subject to risks from customer concentration and fixed-price, long-term contracts, particularly those related to complex engineered equipment.

Risks

• The occurrence of any event, change, or circumstance that could give rise to the right of one or both parties to terminate the definitive agreement.
• The possibility that the transaction does not close when expected or at all due to unreceived or unsatisfied regulatory, shareholder, or other approvals and conditions.
• The transaction may be more expensive to complete than anticipated due to unexpected factors or events.
• New Enviri's ability to successfully enter into new contracts and complete new acquisitions, divestitures, or strategic ventures.
• New Enviri's inability to comply with applicable environmental laws and regulations or obtain, renew, or maintain compliance with its operating permits or license agreements.
• New Enviri having a smaller size and more limited resources than the former Enviri Corporation.
• The seasonal nature of New Enviri's business.
• Risks caused by customer concentration, fixed-price and long-term customer contracts (especially those related to complex engineered equipment), and the competitive nature of the industries in which New Enviri will operate.
• The outcome of any disputes with customers, contractors, and subcontractors.
• The financial condition of New Enviri's customers, including their ability to maintain credit availability.
• Higher than expected claims under New Enviri's insurance policies, or losses that are uninsurable or exceed existing insurance coverage.
• Market and competitive changes, including pricing pressures, market demand and acceptance for new products, services, and technologies; changes in currency exchange rates, interest rates, commodity and fuel costs, and capital costs.
• New Enviri's ability to attract and effectively retain key management and employees, disruptions associated with labor disputes, and increased operating costs associated with union organizations.
• New Enviri's inability or failure to protect its intellectual property rights from infringement.
• Failure to effectively prevent, detect, or recover from breaches in New Enviri's cybersecurity infrastructure.
• Changes in the worldwide business environment, including general economic and industry conditions and cyclical slowdowns impacting the steel and aluminum industries.
• Fluctuations in exchange rates between the U.S. dollar and other currencies in which New Enviri will conduct business.
• Unforeseen business disruptions due to changes in economic conditions, governmental laws and regulations (including environmental, occupational health and safety, tax, and import tariff standards), political instability, civil disobedience, armed hostilities, public health issues, or other calamities.
• Liability for and implementation of environmental remediation matters.
• Product liability and warranty claims associated with New Enviri's operations.
• New Enviri's ability to comply with financial covenants and obligations to financial counterparties.
• The outstanding indebtedness and exposure to derivative financial instruments to which New Enviri will be subject that may be impacted by changes in interest rates.
• Tax liabilities and changes in tax laws.
• Changes in the performance of equity and bond markets that could affect the valuation of assets in New Enviri's pension plans and the accounting for pension assets, liabilities, and expenses.
• Risk and uncertainty associated with intangible assets.

Future Outlook

New Enviri is positioned for success with a stronger capital structure, enhanced operational and financial flexibility, and an improving cash flow profile. Harsco Environmental expects significant upside from steel market recovery and continued execution of its leadership and growth strategy. Harsco Rail is focused on stabilizing operations, phasing out loss-making Engineered-to-Order (ETO) contracts, and expects project cash flows to turn positive in 2027.

Management Comments

• Nick Grasberger: "We are pleased to have reached this agreement, which is the result of a comprehensive strategic alternatives process to maximize value for our shareholders and realize the sum-of-the-parts valuation of our businesses."
• Nick Grasberger: "This transaction is a testament to our teams dedication and leadership, and we are confident that the business and its employees will prosper as part of Veolia."
• Nick Grasberger: "In addition to the significant cash consideration shareholders will receive, we are also positioning New Enviri to achieve its goals and to create shareholder value over time. As a market-leading provider of innovative services and products, New Enviri will have a strong capital structure and an improving cash flow profile."
• Nick Grasberger: "We remain laser focused on continuing to take actions to stabilize Harsco Rail while leveraging innovation and service capabilities to support Harsco Environmentals leadership and growth."
• Nick Grasberger: "As General Counsel, Russell has been a trusted member of our leadership team for many years, helping to guide our organizations global strategy across segments and drive major initiatives, among other contributions. His deep business acumen and proven ability to navigate mergers and acquisitions, regulatory matters, and transformation efforts, makes him exceptionally qualified to lead New Enviri in this pivotal next chapter."
• Russell Hochman: "I am honored to serve as New Enviris CEO and am confident in the companys potential. New Enviri will be positioned for success, supported by a stronger capital structure that will create enhanced opportunities for both businesses."
• Russell Hochman: "We will continue to be guided by the core values of integrity, safety, sustainability, and innovation, and our success will be built on the strength of our talented teams and their ability to deliver exceptional service and solutions for our customers. We expect our initiatives to drive progress and remain committed to unlocking shareholder value as we have demonstrated with todays announced transaction."

Industry Context

This announcement reflects a strategic realignment within the environmental services and industrial solutions sectors. The sale of Clean Earth to Veolia, a global leader, indicates ongoing consolidation and strategic acquisitions in the specialized waste management market. The spin-off of Harsco Environmental and Rail into 'New Enviri' creates a more focused entity, allowing it to better address specific industry dynamics in on-site mill services (steel industry recovery) and rail maintenance (infrastructure investments, technology adoption), potentially enhancing its competitive positioning and ability to capture growth opportunities in these distinct markets.

Comparison to Industry Standards

• The Clean Earth sale valuation of 18.6x LTM 9/30 Deal-Adjusted EBITDA is a strong multiple, suggesting a premium valuation for the business within the environmental services sector.
• New Enviri's projected net leverage of approximately 2.0x net debt to Adjusted EBITDA at closing is described as 'conservatively capitalized,' which is generally favorable for a newly independent company, providing financial stability and flexibility compared to highly leveraged peers.
• Harsco Environmental is positioned as a 'Leading global provider of on-site mill services for the steel industry' with a 'Critical partner' relationship with the world's largest steel producers for over 70 years, indicating a strong market position and long-standing customer relationships.
• Harsco Rail is identified as a 'Leading global provider of rail maintenance solutions' and a 'Technology leader with reputation for service and support,' suggesting a competitive advantage in its market segment.
• Comparable companies listed for New Enviri include AZZ (NYSE:AZZ), Befesa (XTRA:BFSA), Mistras Group (NYSE:MG), SunCoke Energy (NYSE:SXC), TIC Solutions (NYSE:TIC), and Vesuvius (LSE:VSVS), providing a benchmark for industry context.

Management Changes

Corporate Governance

Legal Proceedings

• The filing outlines procedures for 'Transaction Litigation' (any Action brought by stockholders relating to the transactions), requiring prompt notice and cooperation between Buyer and Pubco in defense or settlement.
• Buyer's consent is required for any settlement of Transaction Litigation that would impose liability on Buyer or its Affiliates (including the Company Group) or impose an injunction or equitable relief after the Effective Time.
• Risks include the 'outcome of any disputes with customers, contractors and subcontractors' for New Enviri's businesses.

Related Party Transactions

• The transaction involves a complex series of intercompany mergers, reorganizations, and distributions between Enviri Corporation and its direct and indirect subsidiaries (CLEH, Inc., Enviri LLC, Enviri II Corporation) prior to the final merger with Veolia's subsidiary.
• Intercompany Accounts outstanding immediately prior to the Distribution Time are to be repaid, settled, or eliminated through cash payments, dividends, or capital contributions.
• All Tax sharing, Tax allocation, Tax indemnity, or similar agreements between any member of the Company Group and any member of the Spinco Group will be terminated as of the Distribution Date.
• The Separation Agreement and other Transaction Documents govern the ongoing relationship and allocation of liabilities between the Company Group (post-acquisition by Veolia) and the Spinco Group (New Enviri).

Stakeholder Impact

• Shareholders: Expected to receive significant cash consideration ($14.50 $16.50 per share) and retain ownership in New Enviri, potentially unlocking 'sum-of-the-parts value'.
• Employees (Clean Earth): Expected to prosper as part of Veolia, a global leader in environmental services.
• Employees (New Enviri): Will be covered by employee protections for at least one year post-distribution, including comparable base salary/wage rates, target incentive compensation, and substantially comparable other compensation and benefits. Service credit for vesting, eligibility, and benefit accrual in new plans will be provided.
• Customers (Clean Earth): The business will continue under Veolia, a major player, potentially enhancing service offerings and stability.
• Customers (New Enviri): Harsco Environmental aims to leverage innovation and service capabilities, while Harsco Rail focuses on stabilizing operations and resolving ETO contracts to improve service delivery.
• Creditors: Enviri intends to repay approximately $1.35 billion of existing debt, resulting in a conservatively capitalized New Enviri with approximately 2.0x net leverage, which should be favorable for creditors of the remaining entity.

Next Steps

• Enviri shareholder approval of the transaction.
• Expiration of the waiting period under the Hart-Scott Rodino Act and other customary regulatory approvals.
• Filing and effectiveness of a Form 10 registration statement for New Enviri with the U.S. Securities and Exchange Commission.
• Completion of the New Enviri spin-off transaction.
• The Enviri Board will determine the final cash consideration per share prior to closing.
• The Board of Directors for New Enviri will be announced at a later date.
• Russell Hochman will transition to Chief Executive Officer of New Enviri upon the effective date of the separation.
• Nick Grasberger will remain with Enviri through the completion of the Clean Earth sale to support a seamless transition.
• Harsco Rail's Engineered-to-Order (ETO) contracts are expected to progress through formal customer acceptance of equipment during 2026.
• Harsco Rail's project cash flows are projected to turn positive in 2027.

Key Dates

Recommendation

The transaction provides a substantial immediate cash return to shareholders, significantly above the recent unaffected stock price, while allowing them to retain equity in a deleveraged, more focused entity (New Enviri) with clear strategies for value creation in its core businesses. The strategic rationale of unlocking 'sum-of-the-parts value' is compelling, and the financial restructuring positions New Enviri for future growth and improved cash flow, making it an attractive investment.

Keywords

Enviri, Clean Earth, Veolia, Spin-off, Harsco Environmental, Harsco Rail, Divestiture, Merger, Environmental Services, Waste Management, Steel Industry, Rail Maintenance, Corporate Restructuring, Shareholder Value, Debt Reduction, Russell Hochman, CEO Appointment, SEC Filing, NVRI, NYSE