When Allied Waste, Scottsdale, Ariz., completes its merger with American Disposal Services, Burr Ridge, Ill., in the fourth quarter of this year, the combination will form the third-largest solid waste company in the nation.
Annualized revenues after the merger will total approximately $1.5 billion. The company will have a leading market presence in 25 states located largely in the Midwest and South, with 109 collection companies, 67 transfer stations and 69 landfills. Through June 30, 1998, the company's assets also included 29 recycling facilities.
A leading consolidator in the solid waste industry, Allied acquired 132 companies between 1991 and 1997. Including the American Disposal acquisition, Allied has brought approximately 35 companies into the fold through the third quarter of 1998.
Allied's acquisition strategy aims to increase revenues with domestic acquisitions, including tuck-ins and new market entries. In its search for compatible companies, Allied focuses on a strict business model of vertical integration. Under this model, the company seeks acquisitions that will assure that company collections can be disposed of in company landfills.
Consequently, Allied boasts an industry-leading internalization rate in the 70 percent range. "Our target is 80 percent internalization," says Henry Hirvela, Allied's vice president and chief financial officer. Operating expertise drives Allied's management philosophy. "We're a garbage company," Hirvela says. "Our senior executives grew up in the business managing collections, running trucks and operating landfills."
In practice, this philosophy has led to decentralized day-to-day operational decision-making supported by centralized finance and management information systems.
According to Allied's 1997 annual report, "Our business is a local business and the best business decisions are made by the people in touch with the local markets."