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Republic Services Discards Takeover Bid

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The Associated Press

Published: July 19, 2008

HARTFORD, Conn. - The trash talking has begun.

In a stinging letter Friday, garbage disposal company Republic Services rejected a $6.19 billion unsolicited takeover offer from larger rival Waste Management, announced this week.

Fort Lauderdale-based Republic, the nation's third-largest waste hauler, instead wants to stick with an agreement announced June 23 to buy No. 2 Allied Waste Industries, a deal worth $6.07 billion when it was unveiled in June.

"Republic is not for sale," James O'Connor, chairman and chief executive at Republic Services, wrote to David Steiner, CEO of Waste Management. "Although we are always cognizant of our fiduciary duties, Republic has not put itself up for sale as a result of entering into a strategic merger with Allied Waste Industries Inc."

Republic said it does not expect Waste Management's all-cash offer of $34 a share to be more favorable to its stockholders, and that terms of the earlier agreement prevent it from giving information to or entering talks with its Houston-based suitor, the nation's largest garbage collector and landfill company.

"In your press commentary, you referred to the Waste Management proposal as 'opportunistic.' We believe that your proposal is opportunistic for you and that it will deny Republic stockholders the opportunity provided by the merger between Republic and Allied."

O'Connor said Waste Management's proposal, which was announced Monday, will not prompt Republic officials to change their strategy "and we are concerned that it may be an effort by our largest competitor to disrupt our plans."

A call seeking comment was left with a spokeswoman for Waste Management. A spokesman for Phoenix-based Allied Waste could not be reached Friday.

O'Connor said Republic's board of directors thinks the Waste Management proposal "seriously undervalues" Republic. Financial analyses presented to officials of Republic and Allied support a valuation "substantially above" $34 a share, he said.

Shares of Republic fell 5 cents to end at $32.45, and Waste Management fell 5 cents to $35.51. Allied shares rose 31 cents to close at $12.13.

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