Republic says no to Waste Management

Fort Lauderdale, Fla.'s Republic Services (NYSE: RSG) announced today that its board has rejected a buyout offer from Houston-based industry leader Waste Management (NYSE: WMI). Republic Services said it's committed to its deal with Allied Waste Industries (NYSE: AW), headquartered in Phoenix.

The board's reaction comes just four days after Waste Management made a $34 per share all-cash offer for rival Republic Services (see Waste Management moves in on Republic Services). That deal would have blocked Republic's bid to bulk itself up by acquiring Allied Waste, combine the country's No. 2 and No. 3 waste and environmental services providers.

Republic and Allied announced their merger plans in June, with the deal valued at over $6 billion in Republic stock at the time (see Republic to buy Allied Waste for over $6B in stock).

"The board is unanimously of the view that the Waste Management proposal seriously undervalues Republic," said James O'Connor, chairman and CEO of Republic, in a letter to Waste Management CEO David Steiner.

"The board believes that the merger between Republic and Allied will create significant value generating opportunities, including significant cost saving synergies, which will result in additional value for Republic stockholders."

In addition to landfill and garbage collection services, all three companies have significant recycling operations, as well as landfill gas to energy and waste to energy operations.

O'Connor said a transaction with Waste Management would involve significant additional regulatory complexities versus a merger with Allied, and noted the fact that Waste Management has not yet obtained financing commitments for the more than $6 billion of cash needed to complete the proposed deal.

Waste Management said it "will evaluate the company's options."