Waste Management Mulls $3B Sale Of RNG Business: Report

Waste Management, Inc. WM reportedly explored divestment of its renewable natural gas business that could be worth about $3 billion.

The company is working with JP Morgan Chase & Co. JPM to gauge interest from potential energy companies and private equity firms, reported Reuters.

As per the report, Waste Management aims to offload the rights to develop RNG operations on 115 landfills that it owns, adding the company would retain ownership of the landfills. 

If the deal talks conclude successfully, it would mark one of the biggest-ever asset sales in the nascent U.S. RNG industry, as per the report.

The company’s RNG unit currently generates about $150 million of EBITDA and projects that the unit would contribute over $500 million of adjusted earnings before interest, tax, depreciation and amortization (EBITDA) by 2026. 

As per the report, Waste Management is hoping the unit’s valuation to be comparable to, or exceed, the earnings multiple at which Morrow Renewables sold RNG operations at landfills to Enbridge Inc ENB in late 2023. 

Investors can gain exposure to the stock via VanEck Environmental Services ETF EVX and IShares U.S. Utilities ETF IDU.

Price Action: WM shares are up 0.17% at $212.56 premarket at the last check Friday.