Republic Services, Allied Waste to Merge

Republic Services (RSG Quote - Cramer on RSG - Stock Picks) has inked a deal to acquire fellow environmental services and solid waste collection company Allied Waste Industries (AW Quote - Cramer on AW - Stock Picks) in an all-stock deal.

Under the terms of the proposed merger, shareholders of Phoenix-based Allied shareholders will receive 0.45 shares of Republic common stock for each share of Allied they hold. Fort Lauderdale, Fla.-based Republic ultimately will issue 198 million shares of common stock to Allied shareholders, representing about 52% ownership of the merged company.

The combined company, Republic Services, will be based in Phoenix and its shares will trade on the NYSE under the symbol RSG. The company will have a total market cap of about $12 billion and will generate annual revenue of about $9 billion. The deal, which is expected to close by the fourth quarter, is expected to be accretive to Republic's earnings per share in the first year following completion of the merger.

James O'Connor, Republic's chairman and chief executive, will retain those titles when the companies merge. Don Slager, Allied's president and chief operating officer, will retain those titles., while Republic's CFO, Tod Holmes, will continue on that role.

"Our two companies have known and respected each other for many years, and the time is right for us to take the next logical step in the development of both companies, thus accelerating our ability to achieve our strategic objectives and enhancing our plan for profitable growth," said Allied's CEO, John Zillmer, in a statement. "Republic has an extensive presence in the high-growth Sunbelt markets, an established franchise business and a strong capital structure. Allied has a broad national footprint, an innovative procurement platform and significant internalization opportunities. Together, we are positioned for greater success than either company could achieve on its own."