Waste Management wants to buy Republic Services for $34 per share despite deal with Allied Waste

By Lisa Kerner

Charlotte, N.C., July 14 - Waste Management, Inc. proposed acquiring Republic Services, Inc. for $34 per share in cash, it was announced on Monday.

According to Waste Management, the offer price is a 22% premium over the closing price of Republic Services stock on July 11.

Waste Management believes its proposal is superior to the June 23 merger agreement between Republic Services and Allied Waste Industries, Inc.

Under the companies' merger agreement, Allied Waste shareholders will receive 0.45 shares of Republic Services common stock for each share of Allied Waste common stock held, it was reported previously.

Republic Services said its board of directors, along with its legal and financial advisers, will review Waste Management's proposal. They will respond in "due course," according to a Republic Services statement.

Waste Management is asking Republic Services' board to determine that its proposal could reasonably be expected to lead to a superior proposal as defined in the Republic Services-Allied Waste merger agreement.

The determination would give Waste Management access to Republic Services' information and open the door to discussions between the two companies.

Credit Suisse Securities (USA) LLC is "highly confident" it can arrange financing for the proposed transaction, Waste Management said.

"The combination is highly complementary and fits well with Waste Management's strategy and primary financial goals of earnings growth, margin expansion, strong cash flow generation and increasing our long-term return on invested capital," Waste Management chief executive officer David P. Steiner said in a company news release.

"Based on publicly available information, we expect the transaction to be accretive to earnings in the first year and to deliver synergies of at least $150 million," Steiner said.

Waste Management noted its board is committed to maintaining the company's investment-grade status and continuing its annual dividend of $1.08 per share.

In June, Republic Services and Allied Waste announced they would combine to form a waste and environmental services company with an expected total market capitalization of approximately $12 billion. Both companies' boards of directors approved the transaction, which is slated to close by the fourth quarter of 2008, a prior news release stated.

Allied Waste is the second-largest non-hazardous solid waste services company in the United States. The company is based in Phoenix.

Fort Lauderdale, Fla.-based Republic Services provides environmental services including solid waste collection, transfer and disposal services in the United States.

Waste Management, located in Houston, provides integrated waste services in the United States and internationally.

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