Republic Services, Inc.
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Filed by Republic Servies, Inc.
pursuant to Rule 425
under the Securities Act of 1933, as amended, and
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deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934, as amended.
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Subject Company: Republic Services, Inc.
(Commission File No. 1-14267) |
On August 14, 2008, Republic Services, Inc. issued the attached statement
regarding the proposal received from Waste Management, Inc. on August 11, 2008.
Contacts for Republic Services:
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Media:
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Investors:
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Both: |
Will Flower
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Tod Holmes
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Chuck Burgess |
(954) 769-6392
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(954) 769-2387
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The Abernathy MacGregor Group |
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or
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(212) 371-5999 |
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Ed Lang |
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(954) 769-3591 |
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REPUBLIC SERVICES DECLINES TO ENTER INTO DISCUSSIONS WITH WASTE
MANAGEMENT FOLLOWING REVIEW OF REVISED MERGER PROPOSAL
Board Continues to Believe that the Waste Management Proposal Does Not Constitute,
And Could Not Reasonably Be Expected to Lead to, a Superior Proposal
Republic Services Reiterates Commitment to Merger with Allied Waste
To Create a Leading Waste and Environmental Services Provider
FORT LAUDERDALE, Fla., August 14, 2008 Republic Services, Inc. (NYSE: RSG) today announced that
its Board of Directors, after careful consultation with its legal and financial advisors,
unanimously determined that the Waste Management, Inc. (NYSE: WMI) revised proposal announced on
August 11 continues to undervalue Republic Services and fails to satisfactorily address the issues
identified by the Board in its response to Waste Managements first proposal. As a result, the
Board believes that the revised proposal does not constitute, and could not reasonably be expected
to lead to, a transaction that is more favorable to Republic stockholders than the merger currently
contemplated between Republic and Allied Waste Industries, Inc. (NYSE: AW).
Republic stated that, having made such a determination, it may not, under Republics existing
merger agreement with Allied Waste, furnish information to, or have discussions and negotiations
with, Waste Management.
In a letter to Waste Management, Republic Services stated that the Republic Board unanimously
believes that the revised Waste Management proposal still substantially undervalues Republic,
given that the proposal values Republic at a premium of just 10% over the five-day average closing
stock price of Republic stock prior to the day on which Republic and Allied confirmed that they
were involved in discussions regarding a possible business combination and a premium of
approximately five percent over Republics 52-week high. The letter also cites the Boards belief
that the revised Waste Management proposal remains substantially more conditional than the merger
with Allied Waste. In particular, Republic noted that the regulatory and financing risks to
Republic shareholders were not materially reduced in the revised proposal.
Republics Board continues to believe the Allied Waste merger offers more long-term value and
certainty for its stockholders, and the company remains committed to moving forward with its
integration planning and achieving regulatory and shareholder approval for the transaction.
Republic also said that its Board of Directors has not changed its recommendation of the existing
merger with Allied.
Below is the full text of the letter Republic Services sent to Waste Management:
August 14, 2008
David P. Steiner
Chief Executive Officer
Waste Management, Inc.
1001 Fannin, Suite 4000
Houston, Texas 77002
Dear David,
I am writing to respond to your letter of August 11, 2008, revising Waste Management
Inc.s proposal to acquire Republic Services, Inc. Our Board continues to believe that the
Waste Management proposal is not a basis to change Republics strategic direction.
After careful consultation with our outside legal and financial advisors, our Board of
Directors unanimously determined that the Waste Management proposal does not constitute, and
could not reasonably be expected to lead to, a transaction that is more favorable to
Republic stockholders than the merger currently contemplated with Allied. As you know,
Republic is legally bound to its merger agreement with Allied, and under the merger
agreement, having made such a determination, Republic may not furnish information to, or
have discussions and negotiations with, Waste Management.
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The Board is unanimously of the view that the revised Waste Management proposal still
substantially undervalues Republic. Your revised proposal represents a premium of less than
10% to the average closing price of the five trading days before the day on which Republic
and Allied confirmed that they were involved in discussions regarding a possible business
combination, and a premium of approximately 5% to Republics 52 week high.
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. Republic is not for sale, and
financial analyses described in our proxy statement support an independent standalone
valuation of the merged company substantially above $37.00 per share. Our shareholders have
expressed to us, privately and publicly, their appreciation of the potential value of the
Republic-Allied Waste merger. Based upon our contacts with shareholders, our Board believes
that Republic shareholders would not want that potential value sold on the cheap.
As to your other points, you state that your proposal charts a course without any
additional risk, cost or delay to Republic. Upon analyzing your proposal carefully, we do
not see the basis for your statement, causing us to continue to question Waste Managements
true motives for proposing a transaction with Republic.
Our assessment remains that a transaction with Waste Management will involve
significant additional regulatory risk, notwithstanding your assurances to the contrary.
Based on our contractual provisions and our meetings to date with regulators, we feel very
comfortable that the Allied Waste transaction will receive all necessary approvals. The
same cannot be said for your proposal, despite the claims of your most recent letter. We
believe a Waste Management transaction is likely to require substantially greater
divestitures than a merger with Allied Waste and more than what would be required to comply
with the 1999 consent decree. You have not expressed a commitment to undertake the level of
divestitures necessary to consummate a Waste Management transaction, providing us with no
greater confidence about your ability to successfully complete a transaction. Given this,
the proposed $250 million break-up fee fails to adequately address this risk, as it neither
guarantees consummation nor makes Republic whole if the transaction were not consummated due
to antitrust concerns.
As to financing, our Board is still concerned that Waste Management has not executed
customary financing commitments for the more than $7.5 billion of cash needed to complete
your proposed transaction. For a transaction of the magnitude you propose, your assurances
that financing is forthcoming are simply not sufficient. Your statement that the terms of
the financing may improve if we were negotiating does not excuse your failure to evidence
your financial capability to complete the transaction in a customary fashion.
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Your express condition that Waste Management maintain an investment grade rating
continues to be troubling, especially in light of Waste Managements commitment to maintain
its current level of dividends. In that regard we note the cautionary statements issued by
the rating agencies, including a comment on August 11 by a Moodys analyst that Waste
Managements revised proposal would require significant financing to complete and, if
incremental debt were used for the transaction, could result in credit metrics at WMI that
fall deeper into speculative grade rating territory...
Finally, our Board continues to believe that extended timing will be required to
complete a transaction with Waste Management, and you have not provided sufficient details
about your ticking fee proposal to address this issue. While your ticking fee proposal
may address the financial impact of a delay in closing, it does not address operational
issues and additional contingencies that would result from a protracted delay.
Pursuant to the above considerations and others, discussed at length with outside legal
and financial counsel, the Board of Directors of Republic unanimously determined that the
Waste Management proposal does not constitute, and could not reasonably be expected to lead
to, a Superior Proposal, as defined in Section 6.02 of the Republic-Allied merger agreement.
Therefore, the Board has declined to authorize Republic to provide Waste Management with
information or engage in discussions and negotiations with Waste Management.
On behalf of the Board of Directors,
James E. OConnor
Chairman and Chief Executive Officer
About Republic Services, Inc.
Republic Services, Inc. is a leading provider of environmental services including solid waste
collection, transfer and disposal services in the United States. The companys operating units are
focused on providing solid waste services for commercial, industrial, municipal and residential
customers.
Additional Information and Where to Find It
This communication is being made in respect of the proposed business combination involving Republic
and Allied. On August 1, 2008, Republic filed with the Securities and Exchange Commission a
Registration Statement on Form S-4 containing a Joint Preliminary Proxy Statement/Prospectus
concerning the proposed transaction with Allied, which is subject to review by the SEC. The
definitive Joint Proxy Statement/Prospectus will be mailed to stockholders of Republic and Allied.
INVESTORS AND SECURITY HOLDERS OF REPUBLIC AND ALLIED ARE URGED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC
CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain
free copies of the Registration Statement and the definitive Joint Proxy Statement/Prospectus (when
available) and other documents filed with the SEC by Republic and Allied through the website
maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the definitive
Joint Proxy Statement/Prospectus (when available) and other documents filed with the SEC can also
be obtained by directing a request to Republic Services, Inc., 110 SE 6th Street, 28th Floor, Fort
Lauderdale, Florida, 33301 Attention: Investor Relations or by directing a request to Allied Waste
Industries, Inc., 18500 North Allied Way, Phoenix, Arizona 85054, Attention: Investor Relations.
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Participants in Solicitation
Republic, Allied and their respective directors and executive officers and other persons may be
deemed to be participants in the solicitation of proxies in respect of the proposed transaction.
Information regarding Republics directors and executive officers is available in its Annual Report
on Form 10-K for the year ended December 31, 2007, which was filed with the SEC on February 21,
2008, and its proxy statement for its 2008 annual meeting of stockholders, which was filed with the
SEC on April 2, 2008, and information regarding Allieds directors and executive officers is
available in Allieds Annual Report on Form 10-K, for the year ended December 31, 2007, which was
filed with the SEC on February 21, 2008 and its proxy statement for its 2008 annual meeting of
stockholders, which was filed with the SEC on April 10, 2008. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the definitive Joint Proxy
Statement/Prospectus and other relevant materials to be filed with the SEC when they become
available.
Information Regarding Forward-Looking Statements
Certain statements and information included herein constitute forward-looking statements within the
meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking
statements are identified by words such as will, expects, intends, and similar words. Any such
forward-looking statements contained herein are based on current expectations, but are subject to a
number of risks, uncertainties, and other factors that may cause actual results to differ
materially from expectations expressed in such forward-looking statements, many of which are beyond
the control of Republic or Allied. Such risks, uncertainties and other factors include: regulatory
and litigation matters and risks, legislative developments, changes in tax and other laws, the
effect of changes in general economic conditions, the risk that a condition to closing of the
transaction may not be satisfied, the risk that a regulatory approval that may be required for the
transaction is not obtained or is obtained subject to conditions that are not anticipated and other
risks to consummation of the transaction, risks that the combined company may not achieve
anticipated synergies, risks that the acquisition may not be accretive to earnings in the
anticipated time frame, or at all, risks that the combined company may not generate expected cash
flows, risks that the anticipated financing may not be secured, as well as risks relating to the
business and operations of both Republic and Allied included in their respective
filings with the Securities and Exchange Commission. Shareholders, potential investors and other
readers are urged to consider these factors carefully in evaluating our forward-looking statements
and are cautioned not to place undue reliance on forward-looking statements. The forward-looking
statements made herein are only made as of the date of this press release and the parties hereto
undertake no obligation to publicly update these forward-looking statements to reflect subsequent
events or circumstances.
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