S&P: Republic Services, Allied still on watch

Standard & Poor's said that its ratings on Republic Services Inc. (BBB+/watch negative/A-2) and Allied Waste Industries Inc. (BB/watch positive) remain on Creditwatch, where the ratings were originally placed on June 16.

The ongoing Creditwatch follows the announcement on Nov. 14 that both companies have received approval from their respective stockholders in favor of the proposed merger between Republic and Allied, the agency said, adding that it expects that the merger will close before the end of this year, following receipt of antitrust regulatory approval from the U.S. Department of Justice.

If the transaction is completed as proposed, the agency said it would expect to lower the corporate credit rating on the combined Republic to BBB from BBB+ and the short-term corporate credit rating to A-3 from A-2.

The outlook would be negative reflecting the aggressive financial profile of the combined company, the integration challenges related to systems and operations, and concerns related to potential weakening of operating results in light of current recessionary economic conditions, the agency said.

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