Saturday, July 19, 2008

Trash that waste deal!    We recently wrote about the planned deal between the #2 and #3 solid waste companies in the US.  Republic Services (#3) agreed to acquire Allied Waste Industries (#2), in an attempt to gain traction on the #1 company, Waste Management. The three companies together have over 50% of the market.   Now it turns out that Waste Management has stirred. It has made a hostile offer for Republic Services, offering $6.2 billion. The offer would give Republic shareholders 22% premium on stock value. It would also, most likely, would require divesting some `assets. Republic has rejected the initial offer.   According to a New York Times article (“Unsolicited, Waste Giant Seeks to Buy a Competitor”, 7/25/8), this move along with InBev’s acquisition of Anheuser-Busch  or Dow’s acquisition of Rohm & Haas is a sign of a growing trend of strategic buyouts:   “The offer shows the rising confidence of corporate buyers, who have picked up their deal-making even as the troubled credit markets have all but shut out their rivals, the private equity firms. The dearth of financing for buyout firms so far has not extended to these companies:”   There is some thought that Waste Management is just trying to play the spoiler. There is also the idea that Waste Management may be in a hurry to get the deal in while the Bush administration is still in power, expecting a more lenient antitrust stance than a possible Obama administration.   11:59:30 AM

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