Waste Management-Republic: What They’re Saying
Just three weeks after Republic agreed to buy Allied, the solid waste industry once again finds itself firmly in the media spotlight with yesterday’s announcement that Waste Management is seeking to scuttle the Republic-Allied deal by buying Republic. Here’s a brief round-up of what some major media outlets are saying about the offer:
Reuters: “Republic shares had been off 17 percent since word leaked of the company’s plan to bid for Allied, which created the opening Waste Management needed to offer a competing proposal, JPMorgan analyst Scott Levine wrote in a note to clients.
Republic’s strong business in Las Vegas is an especially compelling asset, said [Waste Management CEO David] Steiner, who said Waste Management hadn’t yet started to figure out how many landfills the combined company would have.”
Forbes.com: “Speaking at a Forbes conference several months ago, CEO Steiner said that one key to Waste Management’s future — and a possible driver of the Republic deal — is cornering the waste-to-energy business. With 227 landfills, the company already produces 2 gigawatts of ‘green’ power for 2 million homes. Waste Management burns trash to produce electricity, by tapping the methane produced in burning to create natural gas.”
Bloomberg.com: “Waste Management would likely borrow to pay for Republic, ‘adding considerable debt to the capital structure versus where they are today,’ Fitch analyst Stephen Brown said today in a telephone interview. ‘Equity investors are looking at the overall cost and having some concern about that.”’
The Wall Street Journal: “The three largest U.S. waste companies control more than two-thirds of the nation’s permitted landfill capacity, according to a February 2007 report by the Solid Waste Association of North America, a group of mostly municipal trash officials. A merger of $13-billion Waste Management and $3-billion Republic, in sales, would leave just under half the country’s permitted landfill capacity in the control of the combined company.”
Business Week: “A Republic-Allied deal would create a company with a market share of 17% to 18% in North America, a credible rival to Waste Management’s 24% share, according to Stewart Scharf, an equity analyst at Standard & Poor’s. But Waste Management’s Republic bid would boost its market share to 30%, putting even more distance between Waste Management and its second-place rival, Allied Waste, with a market share of 10% or 11% … Robert Lande, a law professor at the University of Baltimore and a director of the American Antitrust Institute, says by itself a 30% market share wouldn’t raise concerns—at least judging by the record of regulators in the Bush Administration. However, garbage hauling is a very local business, and the competitive landscape would need to be analyzed metropolitan area by metropolitan area, Lande says.”
Related Topics: Recycling/Processing, Landfill Management, Collections/Transfer, Waste Industry
July 15th, 2008 at 2:52 pm
While Mr. Robert Lande, the Law Prof. at the University of Baltimore and a Director at the American Antitrust Institute is correct about the 30% market share shouldn’t raise concern, it’s more than just the waste pick up that’s a problem. There is the total amount of Waste to Energy plants that would be “cornered” and the 50% of landfill space owned by the combined company should make this a no-brainer to deny, except for the Bush Administration.
July 15th, 2008 at 10:01 pm
As a small hauler I am worried about WMI controlling The disposal in my market (atlanta).
Currently I use a RWIN transfer and they give me the best deal short of a direct 20 mile haul to a private landfill. They would really have to divest some disposal and Im sure some hauling too.
Leave a Comment
Advertisement
About
The Heap is a blog featuring waste industry news and analysis written by the staff of Waste Age magazine and guest commentators.Categories
Recent Posts
Calendar
Archives
Your Account
Pages
Subscribe