SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
_________
FORM
8-K
_________
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of Report (Date of earliest event reported):
July 14,
2008
Waste
Management, Inc.
(Exact
Name of Registrant as Specified in Charter)
|
Delaware
|
1-12154
|
73-1309529
|
|
(State
or Other Jurisdiction of Incorporation)
|
(Commission
File Number)
|
(IRS
Employer Identification
No.)
|
|
1001
Fannin, Suite 4000 Houston, Texas
|
77002
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
Registrant's
Telephone number, including area code:
(713)
512-6200
(Former
Name or Former Address, if Changed Since Last Report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
| o |
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
| o |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
| o |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
|
| o |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
|
Item
7.01. Regulation FD Disclosure.
On
July
14, 2008, Waste Management, Inc. (the “Company”) announced that it has
made
a
proposal to the Board of Directors of Republic Services, Inc. (“Republic”) to
acquire all of Republic’s outstanding common stock for $34.00 per share in
cash.
The
Company plans to hold a conference call to discuss the acquisition proposal
at
10 a.m. Eastern Time on July 14, 2008. The conference call number is (888)
562-3356 (U.S./Canada) or (973) 582-2700 (International). Please ask the
operator for the “Waste
Management Conference Call - Call ID 55878734.” The
call
will be simulcast via the internet and can be accessed through the Company’s
website at www.wm.com.
Furnished
as Exhibit 99.1 hereto and incorporated herein by reference is the press release
issued by the Company regarding the acquisition proposal.
Item
9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit | Description |
| 99.1 |
Press
Release, dated July 14, 2008, announcing proposal to acquire Republic
Services, Inc.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
caused this report to be signed on its behalf by the undersigned, hereunto
duly
authorized.
WASTE
MANAGEMENT, INC.
Date: July
14,
2008
By:
/s/
Rick
L Wittenbraker
Rick
L
Wittenbraker
Senior
Vice President
Exhibit
Index
| Exhibit Number | Description |
| 99.1 |
Press
Release, dated July 14, 2008, announcing proposal to acquire Republic
Services, Inc.
|
Exhibit
99.1
For
Further Information:
Waste
Management, Inc.
Analysts:
Greg Nikkel - 713.265.1358
Media:
Lynn Brown - 713.394.5093
Web
site: http://www.wm.com
Joele
Frank, Wilkinson Brimmer Katcher
Dan
Katcher / Ed Trissel – 212.355.4449
WMI
#08-09
WASTE
MANAGEMENT PROPOSES TO ACQUIRE REPUBLIC SERVICES
FOR
$34.00 PER SHARE IN CASH
HOUSTON
–
July 14, 2008 – Waste Management, Inc. (NYSE: WMI) announced today that it has
made a proposal to the Board of Directors of Republic Services, Inc. (NYSE:
RSG)
(“Republic”) to acquire all of Republic's outstanding common stock for $34.00
per share in cash. Waste Management’s proposal represents a premium of
approximately 22% over the closing price of Republic stock on July 11, 2008,
the
last trading day prior to public disclosure of Waste Management’s proposal.
David
P.
Steiner, Waste Management’s CEO, said, “Our $34.00 per share all-cash proposal
clearly offers a better and more certain value alternative to Republic
stockholders than the recently announced Republic-Allied Waste Industries,
Inc.
(“Allied”) transaction. We believe our proposal is a superior proposal.”
At
a
minimum, the Waste Management proposal should allow Republic’s Board to
determine that this proposal could reasonably be expected to lead to a
transaction that is more favorable to Republic's stockholders than the
Republic-Allied merger and is reasonably capable of being completed on a timely
basis, as contemplated by the Republic-Allied merger agreement. This
determination by Republic’s Board will allow Waste Management to begin
discussions with Republic and would permit Republic to grant Waste Management
access to its information.
Mr.
Steiner continued, “We look forward to a prompt determination from Republic’s
Board and to initiating cooperative efforts to bring our proposal to Republic's
stockholders. The proposal also represents a strategic and unique opportunity
that will serve the interests of Waste Management’s stockholders. The
combination is highly complementary and fits well with Waste Management’s
strategy and primary financial goals of earnings growth, margin expansion,
strong cash flow generation and increasing our long-term return on invested
capital. Based on publicly available information, we expect the transaction
to
be accretive to earnings in the first year and to deliver synergies of at least
$150 million. We are confident we will identify additional synergies once we’re
able to conduct our due diligence.
“In
addition, our Board is committed to maintaining our investment grade status
and
continuing our annual dividend of $1.08 per share.
“Our industry is extremely competitive and capital intensive. So, it is very important to achieve operational efficiencies and to improve route density and asset utilization in order to deliver superior service to our customers and higher returns to our stockholders. We believe that the complementary combination of our respective assets, coupled with the operational strengths of each company, will enable the combined company to achieve greater operational efficiencies than either company could achieve on its own.
“Based
on
the track record of each company, we expect the combined entity will have the
systems and processes in place to maximize operational efficiencies. These
include the ability to improve efficiencies through collection routing and
disposal integration, to optimize fleet maintenance, to make continued progress
toward world class safety performance, and to leverage the shared services
and
procurement organizations; all of which should contribute to significant cost
savings. We remain committed to achieving our sustainability goals, which
include increasing the amount of landfill gas-to-energy that we produce and
increasing the amount of recyclables we manage. Republic’s assets will augment
our ability to attain these goals,” added Mr. Steiner.
Waste
Management Proposal is Superior
Waste
Management noted that the Republic-Allied merger agreement expressly
contemplates alternative proposals from third parties and defines a process
for
Republic to respond to those proposals. Under the terms of the Republic-Allied
merger agreement, Republic's Board of Directors is free to share Republic
information, and engage in discussions and negotiations with a party proposing
an alternative transaction, if the Board determines that it “constitutes, or
could reasonably be expected to lead to, a Superior Proposal,” as defined in the
merger agreement.
Mr.
Steiner said, “Obviously it is quite important that we be given access to
Republic information to assist on financing and antitrust fronts and so that
we
can identify additional synergies and other benefits of the merger. We are
encouraged that the Republic-Allied merger agreement expressly permits
Republic’s Board to grant us access. We look forward to working with Republic to
complete a transaction that will create enhanced shareholder value for both
Republic and Waste Management stockholders.”
Regulatory
Approvals
Waste
Management is very experienced with the regulatory aspects related to this
proposed transaction. The proposal provided to the Republic Board directly
addresses the antitrust issues and concretely demonstrates the Company’s
confidence that these issues can and will be dealt with in an effective and
timely manner. Among other things, Waste Management is prepared to assume the
responsibility and the associated risks of divesting assets necessary to comply
with its 1999 consent decree with the Department of Justice. In
this
regard, Credit Suisse Securities (USA) LLC (“Credit Suisse”) has agreed to
assist Waste Management with any required divestitures. Credit Suisse believes,
based on recent contacts with industry participants, that these assets will
attract significant buying interest. Waste Management also believes that, even
with these divestitures, the proposed transaction is a compelling and
significant addition to its business. The
Company believes that a transaction with Republic would close early in 2009.
2
Financing
Waste
Management believes that all of the financing needed to complete the transaction
will be available on satisfactory terms. Waste Management fully expects that,
pro forma for the acquisition of Republic, the Company will maintain its
investment grade status. Waste Management believes it will maintain investment
grade status due in part to the rating agencies’ favorable view of the solid
waste industry on a relative basis; its leading role in the industry; the
enhanced scale and diversity that will result from the merger; its strong
capitalization and commitment to maintain an investment grade rating; its plan
to use net proceeds from divestitures and a significant portion of the
excess
cash
flow
to pay down debt; and comparison of the combined companies’ credit metrics to
criteria generally used by the rating agencies to determine credit ratings.
Credit Suisse has advised Waste Management’s Board of Directors that subject to
due diligence, market conditions and other circumstances, it is highly confident
it can arrange the financing for the transaction that the Company is proposing.
The Company is beginning the process of obtaining commitment letters for
financing with the assistance of Credit Suisse.
The
proposal was unanimously approved by the Waste Management Board of Directors.
Below is the full text of the letter that Waste Management sent to the Republic
Board of Directors.
July
14,
2008
Board
of
Directors
Republic
Services, Inc.
c/o
James
E. O'Connor
Chairman
and Chief Executive Officer
110
S.E.
6th
Street,
28th
Floor
Fort
Lauderdale, Florida 33301
Dear
Jim
and other members of the Board,
Each
of
you should be very proud of the great company you created. As a result of your
hard work and dedication, your assets and people are among the best in the
business, and that is why on behalf of Waste Management, Inc. (“WMI”) and our
Board of Directors, I am pleased to submit this proposal for WMI to acquire
Republic Services, Inc. (“Republic”). We have followed the proposed merger
between Republic and Allied Waste Industries, Inc. ("Allied") since your June
13, 2008 public announcement confirming your merger discussions. We believe
our
proposal outlined below provides superior and certain value to Republic’s
stockholders in a market environment where the value to Republic’s stockholders
of the proposed transaction with Allied has been and may continue to be subject
to considerable uncertainty.
Our
Board
of Directors has unanimously authorized us to propose an alternative transaction
in which WMI would acquire all of Republic’s outstanding common stock at a price
of $34.00 per share in an all-cash merger. This price represents an approximate
22% premium to Republic’s closing stock price on July 11, 2008.
Our
proposal is based on public information regarding Republic. In order to confirm
our assumptions and to determine if there may be other benefits from the
combination, we need access to the same type of information provided to Allied.
Your agreement with Allied allows you to provide such access. We stand ready
to
begin our due diligence process immediately, and request that Republic give
us
access in accordance with the Republic-Allied merger agreement. We expect to
be
able to complete our due diligence review promptly so that we can quickly
execute a merger agreement.
3
Our
financial advisor, Credit Suisse Securities (USA) LLC (“Credit Suisse”), will
lead our financing program and stands ready to devote the time and resources
necessary to put together promptly a full financing package for our proposal.
Credit Suisse has advised our Board of Directors that subject to due diligence,
market conditions and other circumstances, it is highly confident it can arrange
the financing for the transaction we are proposing. The completion of due
diligence should allow our financing sources to issue commitment letters with
respect to the financing, which would be provided to Republic prior to the
execution of the merger agreement.
The
transaction would be structured as a cash merger that would require the approval
of Republic’s stockholders, but not the approval of our stockholders. We
contemplate entering into a merger agreement with Republic on terms similar
to
those contained in the Republic-Allied merger agreement, including the
termination fee provision. Of course, we will need to make modifications related
to converting to an all-cash acquisition. In addition, as discussed below,
our
agreement would include provisions with respect to antitrust matters that we
believe would be more favorable to Republic than those in the Republic-Allied
merger agreement. Subject to the satisfactory completion of our confirmatory
due
diligence and finalization of the terms of a merger agreement with Republic,
we
would be prepared, immediately upon the termination of the Republic-Allied
merger agreement, to enter into a merger agreement that would provide greater
and more certain value to your stockholders than that offered by the
Republic-Allied merger.
We
have
conducted an antitrust review of the combination of our two companies and
considered the issues that might be presented. We are fully prepared to assume
the responsibility (and associated risks) of divesting assets that are
determined by the Department of Justice and the respective State Attorneys
General to be necessary to comply with our 1999 consent decree pursuant to
which
Republic acquired certain WMI assets. We also recognize that such regulatory
authorities may seek other divestitures or other relief, and we are prepared
to
address the other divestitures and relief in the same way Republic and Allied
deal with those issues under the Republic-Allied merger agreement. We are
confident that, with access to the information necessary to finalize our
antitrust plan, all regulatory requirements will be met in a timely manner.
Credit Suisse has agreed to assist WMI with any required divestitures. Credit
Suisse believes, based on recent contacts with industry participants, that
these
assets will attract significant buying interest. We believe that the proposed
transaction between WMI and Republic would close in early 2009.
We
expect
to have a WMI closing condition in our merger agreement relating to maintaining
investment grade status similar to the Republic closing condition in the
Republic-Allied merger agreement. We are quite confident that we will maintain
investment grade status given the rating agencies’ favorable view of the solid
waste industry on a relative basis; our leading role in the industry; our
enhanced scale and diversity that will result from the merger; our strong
capitalization and commitment to maintain an investment grade rating; our plan
to use net proceeds from divestitures and a significant portion of excess cash
flow to pay down debt; and a comparison of the combined companies’ credit
metrics to criteria generally used by the rating agencies to determine credit
ratings.
4
As
you
know, it was necessary to communicate our proposal to you by letter because
of
the provisions of Republic's merger agreement with Allied. Once Republic's
Board
makes the determination required by Section 6.02 of the Republic-Allied merger
agreement, we look forward to the opportunity to speak to you and your
representatives about our proposal and its implementation.
We
are
confident that after you have considered our proposal you will agree that its
terms are significantly more attractive to your stockholders than the Allied
transaction. We believe our proposal is a superior proposal. We think you will
agree that, at a minimum, our proposal “could reasonably be expected to lead to
a Superior Proposal,” as defined in the Republic-Allied merger agreement. That
determination will allow Republic to provide us access to information and to
commence discussions with us with respect to our proposal. We respectfully
request that you make this determination as soon as possible. We stand ready
to
sign a confidentiality agreement with Republic.
This is
a non-binding proposal that is subject to the contemplated execution of a
definitive merger agreement.
We
have
engaged Skadden, Arps, Slate, Meagher & Flom LLP and K&L Gates LLP as
legal counsel to advise us in this transaction. We and our financial and legal
advisors are prepared to move forward immediately with our proposal and are
prepared to devote our full efforts and resources to pursue this transaction
on
an expedited basis.
We
believe that our proposal presents a compelling opportunity for your
stockholders and I look forward to discussing the combination of our two great
companies at your earliest convenience.
Sincerely,
/s/
David
P. Steiner
David
P.
Steiner
Chief
Executive Officer
Waste
Management, Inc.
Advisors
Credit
Suisse Securities (USA) LLC is acting as financial advisor to Waste Management
and Skadden, Arps, Slate, Meagher & Flom LLP and K&L Gates LLP are
acting as legal counsel.
Conference
Call and Webcast
Waste
Management has scheduled a conference call with analysts for 10 a.m. Eastern
Time on July 14, 2008 to discuss its acquisition proposal for Republic. You
may
listen to the analyst conference call by telephone by contacting the conference
call operator 5-10 minutes prior to the scheduled start time and asking for
the
“Waste Management Conference Call – Call ID 55878734.” US/Canada Dial-In #:
(888) 562-3356. Int'l/Local Dial-In #: (973) 582-2700.
It also
will be webcast simultaneously and available on Waste Management’s website at
www.wm.com.
5
For those unable to listen to the live call, a replay will be available 24 hours a day beginning at approximately 1:00 p.m. Eastern Time on July 14, 2008 through July 28, 2008. To hear a replay of the call over the Internet, access the Waste Management website at www.wm.com. To hear a telephonic replay of the call, dial (800) 642-1687 or (706) 645-9291 and enter conference code 55878734.
About
Waste Management
Waste
Management, Inc., based in Houston, Texas, is the leading provider of
comprehensive waste management services in North America. Through its
subsidiaries, the Company provides collection, transfer, recycling and resource
recovery, and disposal services. It is also a leading developer, operator and
owner of waste-to-energy and landfill gas-to-energy facilities in the United
States. The Company’s customers include residential, commercial, industrial, and
municipal customers throughout North America.
Forward-Looking
Statements
This
press release contains forward-looking statements regarding, among other things,
the proposed acquisition of Republic by Waste Management and the anticipated
consequences and benefits of such acquisition, and other financial and
operational items relating to Waste Management and Republic. Statements made
in
the future tense, and statements using words such as “intends,” “estimates,”
“expects,” “projects,” “plans,” “anticipates,” and “believes,” and similar
expressions are intended to identify forward-looking statements. Forward-looking
statements are not a guarantee of performance and are subject to a number of
risks and uncertainties, many of which are difficult to predict and are beyond
the control of Waste Management. These risks and uncertainties could cause
actual results to differ materially from those expressed in or implied by the
forward-looking statements, and therefore should be carefully considered.
Relevant risks and uncertainties relating to the proposed transaction include,
but are not limited to: the risk that required regulatory review and approval
may not be obtained in a timely manner, if at all; Republic’s directors and
stockholders may not approve the proposed transaction; the anticipated benefits
and synergies of the proposed transaction may not be realized; the integration
of Republic’s operations with Waste Management could be materially delayed or
may be more costly or difficult than expected; financing may not be available
or
may not be available on satisfactory terms; the reaction of the credit markets
(including rating agencies) to the proposed transaction and expected
refinancings may not be as anticipated; the proposed transaction may not be
consummated; and legal proceedings may be commenced against Waste Management.
For a description of relevant risks and uncertainties generally applicable
to
Waste Management, please see Waste Management’s filings with the Securities and
Exchange Commission, which are available on Waste Management’s website or at
www.sec.gov. In providing forward-looking statements, Waste Management does
not
intend, and is not undertaking any duty or obligation, to update these
statements as a result of new information, future events or
otherwise.
#
#
#
6