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Jun23
Republic Talking Trash with Allied in $6 Billion Takeover Deal

In a move that strengthens the company as the No. 2 provider of trash services in the U.S., Republic Services Inc. (NYSE:RSG) has reached a deal with competitor Allied Waste Industries Inc. (NYSE:AW), where they'll pay a little over $6 billion to acquire the company. Allied Waste Industries is the No. 3 trash hauler in the U.S. Negotiations have been going on for over two years to make the deal.

Terms of the deal are completely in stock, where Allied shareholders would receive 0.45 share of Republic stock for each share they own in Allied. It puts a value of $14.04 a share on Allied, a slight premium of 3.5 percent. Those numbers are as of Friday's close. For the last 30 trading days it's a 17 percent premium up to June 11.

republic%20services%20makes%20official%20offer%20for%20allied%20waste.gifAllied shareholders will be issued close to 198 million shares, which will give them about a 52 percent ownership in newly merged company.

Based on their existing numbers, the new company would generate about $9 billion in revenue yearly, while market leader Waste Management (NYSE:WMI) had $13.3 billion in revenue in 2007.

Other than the obligatory regulatory review, the deal will be contingent upon the debt of the merged company being rated at investment grade. Moody's has indicated if the deal goes forward as expected, they will give the merged company a "Baa3" rating, the lowest investment-grade rating offered by Moody's, but still investment grade.

Leading the new company will be the existing chairman and CEO of Republic, James O'Connor, who will continue to keep that position in the merged company. Remaining as president and COO in the company will be Don Slager, maintaining the same title and responsibilities he had with Allied.

On the other hand, Allied's chairman and CEO John Zillmer will leave the company once the deal is closed.

The two major reasons for the merger are more power to raise prices, while at the same time cutting overlapping costs, which could be cut by over $150 million over a three year period.

Related Stories:
 
Allied Waste Picked Up By Republic

Republic Services to buy Allied Waste

Republic to Acquire Allied Waste Industries In $6.24 Billion Deal

Republic Services to merge with Allied Waste

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