Fort, Lauderdale, Fla.-based Republic Services has rejected an unsolicited, buy-out offer from Houston-based Waste Management. According to a statement issued by Republic, the all-cash offer “does not constitute, and could not reasonably be expected to lead to, a transaction that is more favorable to Republic stockholders than the merger currently contemplated between Republic and Allied Waste Industries, Inc.” The board unanimously decided to reject Waste Management’s $34 per-share offer, which was made on July 14.
Republic reaffirmed its pending acquisition of Phoenix-based Allied Waste. “The board believes that the merger between Republic and Allied will create significant value generating opportunities, including significant cost saving synergies, which will result in additional value for Republic stockholders,” Republic CEO James O’Connor said in a letter to David Steiner, CEO of Waste Management. “Financial analyses presented to our directors and Allied’s directors, and which will be included in the joint proxy statement to be mailed to our stockholders, support a valuation substantially above $34.00 per share.”
“Republic is not for sale,” O’Connor added in his letter. “Although we are always cognizant of our fiduciary duties, Republic has not put itself up for sale as a result of entering into a strategic merger with Allied Waste Industries, Inc. … In your press commentary, you referred to the Waste Management proposal as ‘opportunistic.’ We believe that your proposal is opportunistic for you and that it will deny Republic stockholders the opportunity provided by the merger between Republic and Allied.”
In the latest Waste Age 100 ranking of the largest solid waste companies, which is available in the June issue of the magazine, Waste Management topped the list with $13.31 billion in 2007 revenue. Allied ranked second, with $6.07 billion in revenue last year, and Republic ranked third, with $3.18 billion in revenue.
Under the terms of Republic’s all-stock merger agreement with Allied, Allied stockholders will receive 0.45 Republic shares for each Allied share they own.
Republic and Allied expect their deal to close in the fourth quarter, pending shareholder and regulatory approval. To complete the transaction, Republic will issue 198 million shares of common stock to Allied shareholders, which would give them a roughly 52-percent ownership stake of the combined company.