NEW YORK (AP) ¿ Shares of Waste Services Inc. and IESI-BFC climbed Monday after an analyst upgraded the waste disposal companies, citing a favorable view of their planned merger announced last month.
Shares of Waste Services rose 47 cents, or 5.6 percent, to close at $8.93, hitting a 52-week high of $8.96 earlier in the session. Shares of IESE-BFC gained 73 cents, or 4.9 percent, to finish at $15.73, also reaching a 52-week high during the day's trading.
Raymond James analyst William H. Fisher upgraded shares of both companies to "Strong Buy" in a note to investors on Monday. He said the Canadian companies will benefit from cost reductions as they consolidate overlapping operations in several markets in Ontario.
Fisher added that strong free cash flow resulting from the merger "would give ample firepower to either reduce debt, pursue acquisitions or raise the dividend."The companies announced the merger on Nov. 11, saying it will create North America's third-largest solid waste management company with nearly $1.5 billion in pro forma revenue. The merger is expected to close in the first calendar quarter of 2010, with the combined company headquartered in Toronto. The companies said the merger will generate $25 million to $30 million in cost efficiencies from the reduction in operating, general and administrative costs.