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AP / Eric Risberg
- Waste Management and Advanced Disposal, two of the largest US waste management companies, join forces in a $ 4.9 billion contract.
- Advanced Disposal shares have jumped 20% on the news.
- This merger should immediately increase earnings and cash flow, and generate annual savings of $ 100 million by reducing costs and reducing capital expenditures.
- Watch the trade of Waste Management and Advanced Disposal live.
The largest US waste management company is taking over the fourth largest US solid waste business in a $ 4.9 billion contract, making it one of the largest acquisitions in collection spaces , recycling and disposal of waste for more than ten years.
Texan Waste Management has agreed to acquire Florida-based Advanced Disposal for about $ 2.9 billion in cash, and will take $ 1.9 billion in net debt from its smallest rival. Shareholders of Advanced Disposal are expected to receive $ 33.15 in cash for each share they hold, a premium of approximately 21% over the average share price of the company over the past month. Advanced Disposal shares have jumped 20% on the news.
Waste Management expects the transaction, the largest in its history according to the Wall Street Journal, to be finalized by the first quarter of 2020. It provides for customers and complementary assets. Advanced Disposal, including 94 collection operations, 73 transfer stations, 41 dumps and 22 sites. recycling facilities – to immediately increase profits and cash flow, which allows it to increase its share buybacks. It also provides annual savings of $ 100 million from cost reduction and capital cost reductions.
Waste Management's revenues increased 3% to nearly $ 15 billion in 2018, resulting in an increase in pre-tax earnings of 8% to approximately $ 2.4 billion. Advanced Disposal sales also grew 3% to approximately $ 1.6 billion, lifting the company from a pre-tax loss of $ 3 million in 2017 to a profit of $ 14 million. of dollars.
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