- Expected to be Immediately Accretive to
Waste Management’s Earnings and Cash Flow
- More than $100 Million of Projected
Annual Cost and Capital Expenditure Synergies Expected to Result in
a Post-Synergy Transaction Multiple Well Below Waste Management's
Current Trading Multiple
- Joins Dedicated and Experienced Teams
with Shared Commitments to Safety, Outstanding Customer Service and
Operating Excellence
- Both Waste Management and Advanced
Disposal Remain Confident in the Strength of their Businesses and
Expect to Achieve Previously Announced Full-Year Guidance,
Excluding Transaction-Related Considerations
Waste Management, Inc. (NYSE: WM) and Advanced Disposal
Services, Inc. (NYSE: ADSW) announced today that they have entered
into a definitive agreement under which a subsidiary of Waste
Management will acquire all outstanding shares of Advanced Disposal
for $33.15 per share in cash, representing a total enterprise value
of $4.9 billion when including approximately $1.9 billion of
Advanced Disposal’s net debt. The per share price represents a
premium of 22.1% to Advanced Disposal’s closing share price as of
April 12, 2019, the last trading day prior to today’s announcement,
and a premium of 20.9% to Advanced Disposal’s 30-day volume
weighted average price as of the same date.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20190415005336/en/
Waste Management to Acquire Advanced
Disposal (Graphic: Business Wire)
Waste Management is North America’s premier environmental
solutions company. This acquisition grows Waste Management’s
footprint and allows Waste Management to deliver to Advanced
Disposal customers unparalleled access to differentiated,
sustainable waste management and recycling services. With 2018
revenues of $1.56 billion, adjusted EBITDA of $427 million and
approximately 6,000 employees, Advanced Disposal serves more than 3
million residential, commercial, and industrial customers,
including over 800 municipalities primarily in 16 states in the
Eastern half of the United States. Advanced Disposal’s solid waste
network includes 94 collection operations, 73 transfer stations, 41
landfills, and 22 owned or operated recycling facilities.
“At Waste Management, we focus on creating value for all
stakeholders, delivering on our commitments to employees,
customers, community partners, shareholders and the environment.
The acquisition of Advanced Disposal extends these commitments by
adding complementary assets and operations as well as a team with a
shared focus on safety, outstanding service and operational
excellence,” said Jim Fish, President and Chief Executive Officer
of Waste Management. “With this acquisition, we will grow our asset
footprint to serve more customers and communities and generate
significant growth and value creation opportunities for Waste
Management’s shareholders and our combined company’s employee base.
Waste Management’s disciplined capital allocation and balance sheet
strength position us well to execute upon this unique opportunity
to expand our scale and capabilities to serve an even broader
customer base and realize the strategic and financial benefits the
acquisition of Advanced Disposal creates.”
“We are pleased to have reached this milestone agreement with
Waste Management to deliver an immediate cash premium to Advanced
Disposal stockholders. We view Waste Management as an industry
leader with one of the most respected brands in the nation,” said
Richard Burke, Chief Executive Officer of Advanced Disposal. “This
acquisition stands as a testament to the strength of the Advanced
Disposal business and brings together two strong waste management
teams with extensive environmental services expertise to better
serve our customers and communities. We look forward to working
with the Waste Management team to complete the transaction and
ensure that we continue to deliver the highest quality service to
our customers.”
Compelling Strategic and Financial Benefits
The acquisition advances Waste Management’s growth strategy and
aligns with the Company’s financial goals, including growth in
earnings per share, margins, and cash flow. Specifically, Waste
Management expects the addition of Advanced Disposal to:
- Expand Waste Management’s Footprint
and Customer Base. This acquisition brings a high-quality,
complementary asset network and customer base under Waste
Management’s proven management team, who has a track record of
operational excellence and a demonstrated ability to grow the
margins and cash flows of the assets Waste Management has
acquired.
- Create Significant Synergies and
Grow Waste Management’s Earnings and Cash Flows. Waste
Management expects the transaction to generate more than $100
million in annual cost and capital expenditure synergies. The
Advanced Disposal acquisition will be immediately accretive to
Waste Management’s adjusted earnings per share and cash flow, with
near-term benefits expected from core operating performance and
SG&A cost savings. Incremental benefits from operating and
capital efficiencies and network optimization will drive long-term
margin expansion and improved free cash flow conversion.
- Support Waste Management’s Capital
Allocation Priorities. Waste Management’s strong balance sheet
and significant free cash flow generation position it well to fund
the acquisition. In 2019, Waste Management’s free cash flow will be
directed to dividend payments, acquisitions and share repurchases
sufficient to offset dilution from stock-based compensation plans.
The Advanced Disposal acquisition will enhance Waste Management’s
cash flow growth and support its commitment to grow shareholder
returns. Waste Management currently expects to achieve targeted
leverage and return to normal run-rate share repurchases within one
year of the acquisition’s close.
- Continue a Commitment to Outstanding
Customer Service and Sustainable Waste Solutions. The
acquisition will join two teams of dedicated employees who are
passionate about helping to manage the environmental needs of
customers and communities with outstanding service and a commitment
to safety. Waste Management expects to continue making investments
in employees, technology, and capital equipment to further grow the
business, and ensure superior, reliable customer service, and
generate strong returns.
Financing
The transaction is not subject to a financing condition. Waste
Management intends to finance the transaction using a combination
of bank debt and senior notes.
Following completion of the transaction, Waste Management
expects to maintain a strong balance sheet and solid investment
grade credit profile with a pro forma leverage ratio within the
Company’s long-term targeted net debt-to-EBITDA range of 2.75x to
3.0x.
Timing and Approvals
The transaction, which was unanimously approved by the boards of
directors of both companies, is expected to close by the first
quarter of 2020, subject to the satisfaction of customary closing
conditions, including regulatory approvals and approval by a
majority of the holders of Advanced Disposal’s outstanding common
shares.
In connection with the definitive agreement, Canada Pension Plan
Investment Board, which owns approximately 19% of Advanced
Disposal’s outstanding shares, has, under the terms of a voting
agreement, agreed to vote its shares in favor of the
transaction.
Companies Confirm 2019 Guidance and Waste Management Confirms
Schedule for Upcoming First Quarter 2019 Earnings Call
Both Waste Management and Advanced Disposal remain confident in
the strength of their businesses and expect to achieve previously
announced full-year guidance, excluding transaction-related
considerations.
As previously announced, Waste Management will release its first
quarter 2019 financial results before the opening of the market on
Thursday, April 25, and will hold a conference call at 10 a.m. ET.
On the call, Waste Management’s management team will also discuss
the Advanced Disposal acquisition announcement.
Advanced Disposal will release its first quarter 2019 financial
results on Tuesday, April 30, after closing of the market. In light
of the pending acquisition, Advanced Disposal will no longer host
its conference call on Wednesday, May 1 or attend the Macquarie
Business Services Conference on Thursday, May 2 in Boston.
Advisors
Centerview Partners LLC is serving as exclusive financial
advisor to Waste Management, and Simpson Thacher & Bartlett LLP
and Vedder Price P.C. are serving as Waste Management’s legal
counsel. UBS Investment Bank is serving as exclusive financial
advisor to Advanced Disposal, and Shearman & Sterling LLP and
Mayer Brown LLP are serving as Advanced Disposal’s legal
counsel.
ABOUT WASTE MANAGEMENT
Waste Management, based in Houston, Texas, is the leading
provider of comprehensive waste management environmental services
in North America. Through its subsidiaries, Waste Management
provides collection, transfer, disposal services, and recycling and
resource recovery. It is also a leading developer, operator and
owner of landfill gas-to-energy facilities in the United
States. Waste Management’s customers include residential,
commercial, industrial, and municipal customers
throughout North America. To learn more information about
Waste Management,
visit www.wm.com or www.thinkgreen.com.
ABOUT ADVANCED DISPOSAL
Advanced Disposal, based in Ponte Vedra, Florida, is the
fourth largest solid waste company in the U.S. and provides
integrated, non-hazardous solid waste collection, recycling and
disposal services to residential, commercial, industrial, and
construction customers across 16 states and the Bahamas. To learn
more information about Advanced Disposal, visit
www.AdvancedDisposal.com.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains “forward-looking statements” within
the meaning of the U.S. federal securities laws about Waste
Management, Advanced Disposal and the proposed acquisition,
including but not limited to all statements about the timing and
approvals of the proposed acquisition; ability to consummate and
finance the acquisition; integration of the acquisition; future
operations; future capital allocation; future business and
financial performance of Waste Management and Advanced Disposal and
the ability to achieve full year financial guidance; future
leverage ratio; and all outcomes of the proposed acquisition,
including synergies, cost savings, and impact on earnings, cash
flow and margin, return on capital, strength of the balance sheet
and credit ratings, which are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
Words such as “expect,” “likely,” “outlook,” “forecast,”
“preliminary,” “would,” “could,” “should,” “can,” “will,”
“project,” “intend,” “plan,” “goal,” “guidance,” “target,”
“continue,” “sustain, “ “synergy,” “on track,” “believe,” “seek,”
“estimate,” “anticipate,” “may,” “possible,” “assume,” and
variations of such words and similar expressions are intended to
identify such forward-looking statements. You should view these
statements with caution and should not place undue reliance on such
statements. They are based on the facts and circumstances known to
Waste Management and Advanced Disposal (as the case may be) as of
the date the statements are made. These forward-looking statements
are subject to risks and uncertainties that could cause actual
results to be materially different from those set forth in such
forward-looking statements, including but not limited to, general
economic and capital markets conditions; the effects that the
announcement or pendency of the merger may have on Waste
Management, Advanced Disposal and their respective business;
inability to obtain required regulatory or government approvals or
to obtain such approvals on satisfactory conditions; inability to
obtain stockholder approval or satisfy other closing conditions;
inability to obtain financing; the occurrence of any event, change
or other circumstance that could give rise to the termination of
the definitive agreement; the effects that any termination of the
definitive agreement may have on Advanced Disposal or its business;
legal proceedings that may be instituted related to the proposed
acquisition; unexpected costs, charges or expenses; failure to
successfully integrate the acquisition, realize anticipated
synergies or obtain the results anticipated; and other risks and
uncertainties described in Waste Management’s and Advanced
Disposal’s filings with the SEC, including Part I, Item 1A of each
company’s most recently filed Annual Report on Form 10-K, which are
incorporated herein by reference, and in other documents that Waste
Management or Advanced Disposal file or furnish with the SEC.
Except to the extent required by law, neither Waste Management nor
Advanced Disposal assume any obligation to update any
forward-looking statement, including financial estimates and
forecasts, whether as a result of future events, circumstances or
developments or otherwise.
NON-GAAP FINANCIAL MEASURES
Advanced Disposal’s 2018 adjusted EBITDA is a non-GAAP measure.
Please see Advanced Disposal’s press release and accompanying
tables dated February 21, 2019, filed with the SEC on Form 8-K, for
additional information about Advanced Disposal’s use of non-GAAP
measures and a reconciliation of 2018 adjusted EBITDA to net
income, the most comparable GAAP measure.
Waste Management’s references to future adjusted earnings per
diluted share and free cash flow are non-GAAP measures. Please see
the notes to Waste Management’s press release dated February 14,
2019, filed with the SEC on Form 8-K, for additional information
about Waste Management’s use of non-GAAP measures.
For purposes of the pro forma leverage ratio, all terms used in
that calculation, including EBITDA, are defined in Waste
Management’s Revolving Credit Agreement filed with the SEC on Form
8-K on June 29, 2018.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. This communication may be deemed to be
solicitation material in respect of the proposed merger between a
subsidiary of Waste Management and Advanced Disposal. Advanced
Disposal intends to file with the SEC a proxy statement in
connection with the contemplated transaction. The definitive proxy
statement will be sent or given to Advanced Disposal stockholders
and will contain important information about the contemplated
transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ
CAREFULLY AND IN THEIR ENTIRETY THE PROXY STATEMENT AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC WHEN THEY BECOME AVAILABLE.
Investors and security holders may obtain a free copy of the proxy
statement (when it is available) and other documents filed with the
SEC at the SEC’s website at www.sec.gov, or without charge, by
contacting Advanced Disposal’s Investor Relations at
investorrelations@advanceddisposal.com or (904) 737-7900 or Waste
Management's Investor Relations at eegl@wm.com or (713)
265-1656.
CERTAIN INFORMATION CONCERNING PARTICIPANTS
Advanced Disposal and its directors and executive officers may
be deemed to be participants in the solicitation of proxies from
Advanced Disposal stockholders in connection with the contemplated
transaction. Information about Advanced Disposal’s directors and
executive officers is set forth in its proxy statement for its 2019
Annual Meeting of Stockholders, which may be obtained for free at
the SEC’s website at www.sec.gov. Additional information regarding
the interests of participants in the solicitation of proxies in
connection with the contemplated transactions will be included in
the proxy statement that Advanced Disposal intends to file with the
SEC.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190415005336/en/
Waste ManagementWeb sitehttps://www.wm.comAnalystsEd
Egl713.265.1656eegl@wm.comMediaTiffiany
Moehring720.346.5372tmoehrin@wm.comAdvanced
DisposalWebsitehttps://www.advanceddisposal.comAnalysts
& MediaMatthew Nelson
904.737.7900matthew.nelson@advanceddisposal.com
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