Waste Management Inc.'s
$6.2 billion offer to acquire Republic Services Inc. wasn't enough to derail its rival's
planned merger with Allied Waste Industries. Republic announced on Friday that it would not enter negotiations with Waste Management, saying the proposed deal would generate fewer cost savings and less value for shareholders than the company's previously announced deal with Allied Waste Industries Inc., an all-stock deal valued at $6.07 billion. A merger of Allied and Republic, the No. 2 and 3 haulers in the country, would allow those companies to challenge industry leader Waste Management, which posted 2007 revenue of $13.3 billion. That compares with $3 billion for Republic and $6 billion for Allied.
In a
letter to Waste Management chief executive David Steiner, Republic's board stated that Waste Management's $34 per share offer "seriously undervalues" the company. Republic's stock was trading at or around that price in the month before it announced plans to merge with Allied. But investors reacted negatively to the Allied deal, driving Republic's stock down 18% from recent highs. In a conference call following Waste Management's bid, Steiner said his company wasn't looking to swallow its rival, but the market reaction created too great an opportunity to ignore.
Waste Management on July 14 reported strong preliminary results for the
second quarter. It's projecting revenue of $3.5 billion, a 3.9% increase from a year ago. Plus, reaction from analysts to its bid for Republic was generally favorable. Those factors will surely figure prominently as
Steiner and his deal team plot their next move.
-- Suzanne Stevens
Juergen Lasowski
And the winners are...
