Trash talk

12 August 2008 By Lauren Silva

The largest US rubbish collector increased its bid for rival Republic Services by 9% to $37 a share, or $8.2bn. At least one large shareholder objects to the deal, which doesn’t look compelling. Shareholders might want to encourage the board to back off.

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Waste Management has increased its offer for Republic to $37 a share from its previous offer of $34 a share. In its revised proposal, Waste Management said it would pay Republic a fee of $250m if the two parties were unable to close a transaction due to opposition from the US Department of Justice. The company also offered a ticking fee in the event that the proposed transaction does not close on or before a mutually acceptable date due to antitrust clearance delays.

Earlier this year, Republic offered to buy a third waste company, Allied Waste, for about $6bn. This week Allied's chairman and chief executive John Zillmer commented on Waste Management's offer for Allied.

Despite strong opposition from its own shareholders and other constituencies, and the severe antitrust regulatory and financing challenges associated with its unsolicited proposal to acquire Republic, Waste Management is pushing ahead with its attempt to disrupt our two companies' strategic plans with another offer that pales in comparison to the significant value that will be generated through the combination of Republic and Allied.

Bill Gates's foundation BGI was opposed to Waste Management's previous offer for Republic. In a letter to Waste Management's chief executive and board, BGI said, We can only assume your illtimed and poorly conceived pursuit of Republic is designed to disrupt what you perceive as a competitive threat to your position in the market.

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