Republic Services declines negotiations with Waste Management, continues merger with Allied Waste

By Jennifer Chiou

New York, July 18 - Republic Services, Inc. said that after consulting with its legal and financial advisers, it determined that Waste Management Inc.'s merger proposal from July 14 is not superior to its proposal from Allied Waste Industries, Inc.

The company, therefore, will not have negotiations with Waste Management.

Republic stated in a letter that it has "not put itself up for sale as a result of entering into a strategic merger with Allied Waste."

In a July 14 letter, Waste Management proposed to acquire Republic for $34 per share in cash. Republic responded that it was "unanimously determined that the Waste Management proposal does not constitute, and could not reasonably be expected to lead to, a transaction that is more favorable to Republic stockholders than the merger currently contemplated with Allied Waste."

In addition, Republic noted that "Waste Management has not obtained customary financing commitments for the more than $6 billion of cash needed" to complete the proposed transaction.

On Friday, Waste Management said that it was "disappointed in the Republic board of directors' unwillingness to consider" its proposal as one that could reasonably be expected to lead to a superior proposal.

Waste Management added that its proposal represented a premium of about 22% over the closing price of Republic stock on July 11.

In response to Republic's decision, Allied Waste said that it is "pleased that the board of directors of Republic Services has reaffirmed its commitment to the pending Allied-Republic merger, recognizing that it represents the best opportunity to create significant long-term value for our respective shareholders."

Allied Waste added that: "A hypothetical Waste Management-Republic combination would encounter more and greater objections from federal and state regulators than our pending transaction. Waste Management's and Republic's operations substantially overlap."

On June 23, the company said that it was planning a notes offering in connection with its merger with Allied Waste after the companies' boards of directors unanimously approved a definitive merger agreement.

As already reported, under terms of the agreement, Allied Waste shareholders will receive 0.45 shares of Republic Services common stock for each share of Allied Waste common stock.

Based on the closing stock prices of both companies on June 12, this represents a premium of 17% over the average closing price of Allied Waste's stock (NYSE: AW) for the previous 30 trading days.

Republic Services previously noted that it will issue 198 million common shares to Allied Waste shareholders, representing 52% ownership of the combined company.

Republic Services, based in Fort Lauderdale, Fla., provides environmental services including solid waste collection, transfer and disposal services in the United States. Allied Waste is a non-hazardous solid waste services company located in Phoenix.

Waste Management is a Houston-based provider of integrated waste services.

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