It is official. Republic Services is acquiring Allied Waste for about $6.07 in stock to create a much stronger competitor to industry leader Waste Management. The combined entity, to be called Republic Services, Inc., will have $9 billion in annual revenues and a market capitalization of $12 billion, employ over 35,000 people serving more than 13 million customers in 40 states, and own 228 landfills, 257 transfer stations and 86 recycling facilities. Under the terms of the agreement, Republic Services will pay Allied shareholders 0.45 worth of a Republic share for each share held. The companies expect to achieve about $150 million in net pretax annual synergies by the third year following completion of the transaction. Synergies are expected to come from greater operating efficiencies, capturing inherent economies-of-scale through increased vertical integration of markets and leveraging corporate and overhead resources.
Moreover, the company expects to generate strong and predictable cash flows from operations in excess of $1.7 billion annually that will be used to invest in the business, fund the dividend program and reduce debt to maintain and improve its investment grade credit rating. That the combined entity end up with investment grade debt was an important consideration, and perhaps, justification for the merger. Allied currently has a debt load of $6.67 billion, four times its operating profit. Republic however, has debt of only $1.7 billion, or 1.9 times its operating profit.
Another justification comes from rising operating and transportation costs, particularly from higher fuel and commodity prices, and equipment costs is lending more advantage to larger enterprises that can better hedge and save through volume purchase agreements.
Following the completion of the transaction in the fourth quarter of this year, Republic Chairman and CEO James O'Conner will become chairman and CEO of the combined companies, while Allied President and COO Don Slager will retain those positions for the new company...Read More »
Industry groups including the Rubber Manufacturers Association and others are urging the EPA to exclude certain materials used as fuel in boilers rather than define them as solid waste that is subject to regulation under the Resource Conservation & Recovery Act (RCRA). Among the materials that could qualify for the fuel designation are used tires, cement kiln dust, agricultural byproducts, forest thinnings and other biomass and construction materials. With rising fuel costs, these materials are much cheaper than coal, oil and natural gas. But without designation as fuel, burning the materials would subject burners to much stricter and more costly regulation as solid waste incinerators and perhaps eliminate the incentives to do so...Read More »
Waste Industries is still pushing plans to build what could be North Carolina's largest landfill even though a new law precluded the project last year. According to an article in the Virginian-Pilot newspaper, the subsidiary company Black Bear Disposal has requested a new permit from Camden County to build on a 1,060-acre tract along the North Carolina border with Virginia. Its previous permit expired last October. Last August state lawmakers outlawed landfills near wildlife refuges and major waterways. Black Bear is less than 5 miles from the Great Dismal Swamp National Wildlife Refuge. Waste Industries filed suit Dec. 3 in Wake County asking the court to declare the new law unconstitutional or force the state to reimburse the company for the more than $13.5 million spent to develop the project. It is still pending...Read More »
O'ahu's plan to ship a portion of its waste, 2,050 tons per week or up to 100,000 tons per year, to the mainland US for disposal is looking more expensive all the time. Three companies vying for the contract have submitted bids the lowest of which puts the cost at $9.9 million per year which is $2.5 million more than anticipated. Other bids came in at $18.4 million ($184.47 per ton) and $20.4 million ($204.21 per ton) respectively. Currently the city just pays $30 per ton to dump waste at its Waimanalo Gulch Landfill. The city is unfazed, according to City Councilman Todd K. Apo who said that despite the cost, "as long as the company meets the requirements, we should be ready to roll."...Read More »
Salt Lake City-based EnergySolutions has signed a contract valued up to $25 million with the Army Sustainment Command (ASC) to manage and dispose of Class A low-level radioactive wastes at the company's Clive disposal facility. The ASC and Joint Munitions Command (JMC) are responsible for coordinating the disposition of radioactive materials from both active and inactive military installations. The Clive facility is capable of receiving waste by rail which is expected to be the primary means deployed under this contract...Read More »
Norcal Waste Systems' Board of Directors has appointed George P. McGrath as Executive Vice President and Chief Operating Officer. In that role he will head operations and oversee customer service and sustainability programs in the more than 60 communities the company serves in California. Previously, he served as Norcal's Senior Vice President and Chief Information Officer responsible for the company's information systems...Read More »
A subsidiary of Perma-Fix Environmental Services has been awarded an important subcontract for waste management at the Department of Energy's Hanford, Washington Site. The subsidiary, Materials & Energy Corporation (M&EC), will be a small part of a team led by CH2M Hill Constructors, Inc. which was awarded a contract with the DOE valued at $4.5 billion over ten years. M&EC's share is still not known...Read More »
Waste Management said it will release second quarter earnings prior to the opening of the markets on Tuesday, July 29. The company will host a conference call that day at 10 a.m. (ET) to discuss those results and answer questions...Read More »
Louisville KY-based Industrial Services of America said that it expects to earn between $0.42 and $0.44 per share during its second quarter, up substantially from $0.22 per share in the same period last year. Driving these results, "Global demand for commodities continues to be strong, as does pricing for ferrous and non-ferrous materials," said Chairman and CEO Harry Kletter. "We are well positioned to benefit from these demand and pricing trends."...Read More »