Waste Management to acquire Stericycle for $7.2bn to expand environmental service offerings

In a transformative move, Waste Management, Inc. (NYSE: WM) has reached a definitive agreement to acquire all outstanding shares of Stericycle (NASDAQ: SRCL) for $62.00 per share in cash. This deal, valued at approximately $7.2 billion including $1.4 billion of Stericycle’s net debt, marks a significant premium of 24% over Stericycle’s recent trading figures. This acquisition is poised to reshape the landscape of waste management and environmental solutions.

Strategic Expansion and Financial Upside

Waste Management’s acquisition of Stericycle represents a strategic expansion into regulated medical waste and secure information destruction, areas where Stericycle has established considerable expertise. According to Jim Fish, President and CEO of Waste Management, this acquisition aligns with their long-term strategy to diversify and enhance their service portfolio. He emphasized the expected benefits in customer service, environmental impact, and shareholder returns.

Cindy J. Miller, Stericycle’s President and CEO, highlighted the transformation her company has undergone, positioning it ideally for this acquisition. She stressed the opportunity to deliver more diversified services and support growth and development within their team.

Waste Management announces $7.2 billion acquisition of Stericycle to expand environmental services and enhance sustainability.

Compelling Benefits and Synergies

This acquisition is expected to:

– Broaden Services: Incorporate Stericycle’s specialized services into Waste Management’s portfolio, enhancing their offerings in the growing healthcare sector.

– Enhance Sustainability: Strengthen Waste Management’s commitment to sustainable waste solutions, adding value to the recycling and renewable energy landscape.

– Drive Growth: The combined capabilities of both companies are anticipated to generate significant revenue growth and operational synergies, with more than $125 million in annual run-rate synergies expected.

Financial Health and Prospects

Waste Management plans to finance this acquisition through bank debt and senior notes, without needing additional financing conditions. They project a net debt-to-EBITDA ratio of about 3.4x post-acquisition, with a goal to reduce this to their target range of 2.75x to 3.0x within 18 months.

Projected Timelines and Approvals

The transaction has received unanimous approval from the boards of both companies and is slated for completion by the fourth quarter of 2024, pending regulatory and shareholder approvals.

Advisory Roles

Centerview Partners LLC and law firms Vinson & Elkins L.L.P. and Baker Botts L.L.P. are advising Waste Management. BofA Securities and Latham & Watkins LLP are advising Stericycle.

The acquisition of Stericycle by Waste Management not only signifies a major step in Waste Management’s growth strategy but also highlights the evolving needs of the waste management industry, particularly in regulated waste and secure information destruction. As these companies integrate, they are set to offer a more comprehensive range of environmental solutions to their customers, driving forward their mutual goals of sustainability and service excellence.