Republic Services, Allied Waste Set to Merge
Allied shares dip in early Monday trading; Republic shares up, but downgraded by analysts.
June 23, 2008
The directors of Republic Services and Allied Waste Industries approved Monday a merger between the two listed disposal management companies anticipated to create a company with a $12 billion market capitalization.
Under the terms of the deal, Republic Services is going to hand over slightly more than $6 billion worth of its stock in the acquisition; the deal unites two of the largest waste management companies in the U.S. The union of the two companies would have more than 35,000 companies and 13 million customers in 40 states and Puerto Rico.
While both companies touted on Monday the benefit of synergies to be had with a joint linkage, analysts at Raymond James & Associates Inc. downgraded ratings for Republic Services, saying Monday morning that at the current stage in the deal, it remains to be seen what risks the union of the companies will face. Still, the ratings were only downgraded to “outperform” from “strong buy.”
“By combining the strengths of two great companies and integrating executives from both teams, Republic will enhance its leadership position in the U.S. environmental services industry, building on both companies’ foundations of profitable growth,” said James E. O’Connor, Chairman and Chief Executive Officer of Republic.
Despite the deal being valued at about $14.04 per share for Allied Waste Industries stock, its shares fell slightly in Monday morning trading, hovering at around $13.50 before noon. Republic shares, however, were slightly buoyed on the news, trading at about $31.30.
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