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Republic Allied deal more likely

According to the U.S.-based Waste Business Journal, Waste Management which has proposed to buy rival Republic Servi...


According to the U.S.-based Waste Business Journal, Waste Management which has proposed to buy rival Republic Services for $6.73 billion now says “that the current credit market environment made acquisition debt more expensive and a transaction less attractive to Waste.”

These were the words of Waste management CEO David Steiner in a telephone call to Republic CEO James O’Connor as reported in a recently filed S4 with the Securities and Exchange Commission. Steiner went on to say that Waste Management “continued to be interested in acquiring Republic” and “would continue to monitor the credit market and other conditions impacting a possible acquisition of Republic.”

He said “Waste would continue to pursue clearance of its antitrust filing with the Department of Justice.” He also “expressed an interest in buying any assets that would be divested as a result of a Republic-Allied combination, if the Republic-Allied merger went forward.” Most industry analysts including Leone Young of Citigroup, Brian Butler of Friedman, Billings, Ramsey and David Feinberg of Goldman Sachs say that a Republic-Allied deal now appears more likely than a Waste Management-Republic combination.

Below is an excerpt from that filing:

Form S-4/A

REPUBLIC SERVICES INC — RSG

Filed: October 02, 2008 (period:)

Pre-effective amendment to an S-4 filing

“On September 16, 2008, Mr. Steiner made an unsolicited call to Mr. O’Connor in which he indicated that Waste was still interested in acquiring Republic, that the Waste board of directors would meet the following week and that Mr. Steiner would be contacting Republic again in about a week. On September 25, 2008, Mr. Steiner again called Mr. O’Connor. In that call, Mr. Steiner said that Waste continued to be interested in acquiring Republic, and while he thought financing was available he acknowledged that the current credit market environment made acquisition debt more expensive and a transaction less attractive to Waste. Mr. Steiner indicated that Waste would continue to monitor the credit market and other conditions impacting a possible acquisition of Republic, and may further communicate with Republic as Waste continues to evaluate its options in advance of Republic’s expected mid-November stockholder meeting. Mr. Steiner stated that Waste would continue to pursue clearance of its antitrust filing with the Department of Justice. Mr. Steiner also expressed an interest in buying any assets that would be divested as a result of a Republic-Allied combination, if the Republic-Allied merger went forward.”

A complete copy is available along with other documents on Republic’s website:

www.republicservices.com

Recycling investment law passed in U.S. House
The Recycling Investment Saves Energy (RISE) Act passed the House of Representatives last week, 263 171, as part of the overall Senate financial rescue plan and was signed into law by President Bush later that afternoon. The RISE Act was included in the energy extenders provision of the rescue plan and was introduced this session by Sen. Olympia Snowe (R-ME) and later in the House of Representatives by Rep. Melissa Bean (D-IL).

The RISE Act in its current form provides a special depreciation allowance equal to 50 per cent for qualified reuse and recycling property. The term “reuse and recycling property” is defined as any machinery and equipment (excluding buildings and real estate) which is used exclusively to collect, distribute, or recycle qualified reuse and recyclable materials, including software. The RISE Act also statutorily defines the terms recyclable material and recycling for the first time.

This legislation was initially introduced in the 109th Congress by former Sen. Jim Jeffords (I-VT) and had previously included in addition to the depreciation deduction, a 15 per cent tax credit for qualifying recycling equipment and machinery, as permitting recycling facilities to be eligible for tax-exempt bond financing. These provisions were not included in the current bill.

The full text of the RISE Act and corresponding definitions may be viewed by clicking on the link below. The RISE provision is Section 308, beginning on page 229.

http://banking.senate.gov/public/_files/latestversionAYO08C32_xml.pdf


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