Republic Services rejects Waste Management's higher bid

New York, Aug. 14 - Republic Services, Inc. said its board has unanimously decided that the revised offer for the company from Waste Management, Inc. "fails to satisfactorily address the issues identified by the board in its response to Waste Management's first proposal."

As a result, the board said the proposal is not more favorable to Republic's stockholders than the planned merger between Republic and Allied Waste Industries, Inc.

Under the terms of the agreement with Allied Waste, Republic is not permitted to have discussions and negotiations with Waste Management or supply information.

Republic's board said it unanimously believes that the revised Waste Management proposal "still substantially undervalues Republic," given that the proposal values Republic at a premium of just 10% over the five-day average closing stock price of Republic stock prior to the day on which Republic and Allied confirmed that they were involved in discussions regarding a possible business combination and a premium of approximately 5% over Republic's 52-week high.

The board also said it believes Waste Management's proposal remains substantially more conditional than the merger with Allied Waste.

In particular, Republic noted that the regulatory and financing risks to Republic shareholders were not materially reduced in the revised proposal.

Republic said its analyses support an independent standalone valuation of the merged company "substantially above" $37.00 per share.

The board said it believes there is "significant additional regulatory risk" in a merger with Waste Management and is likely to require substantially greater divestitures than a merger with Allied Waste.

It also said it is still concerned that Waste Management has not executed customary financing commitments for the more than $7.5 billion of cash needed.

While the ticking fee addresses the financial impact of a delay in closing, Republic's view is that it does not deal with operational issues and additional contingencies that would result from a protracted delay.

On Aug. 11, Waste Management upped its bid to $37.00 per share from its original July 14 offer of $34 per share.

According to Waste Management, the proposal "provides the certainty of an all-cash transaction that is within the range of value determined by Republic Services' own financial advisor for its pending transaction with Allied Waste Industries, Inc."

Waste Management said its revised proposal addressed concerns raised by Republic Services' board, by offering to:

• Pay Republic Services a fee of $250 million if the parties are unable to close a transaction due to opposition from the U.S. Department of Justice; and

• Include a "ticking fee," increasing the $37.00 per share price by an interest component, in the event its proposed transaction does not close on or before a mutually acceptable date due to antitrust clearance delays.

Waste Management also confirmed that financing for the transaction is available.

Republic Services, based in Fort Lauderdale, Fla., provides environmental services including solid waste collection, transfer and disposal services. Allied Waste is a non-hazardous solid waste services company located in Phoenix.

Waste Management is a Houston-based provider of integrated waste services.

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