Waste Management and Stericycle announced that they have entered into a definitive agreement under which WM will acquire all outstanding shares of Stericycle for $62 per share in cash, representing a total enterprise value of approximately $7.2 billion when including approximately $1.4 billion of Stericycle’s net debt.
The per share price represents a premium of 24% to Stericycle’s 60-day volume weighted average price as of May 23, 2024 – which was the last trading day before an article reported that Stericycle was considering a potential sale. And Stericycle is a premier provider of regulated medical waste and compliance services as well as secure information destruction services.
This acquisition advances WM’s growth strategy, underscores the importance of executing on its sustainability initiatives, and aligns with the Company’s financial goals, including growth in operating EBITDA and cash flow. Specifically, WM expects the addition of Stericycle to expand WM’s already extensive environmental service offerings; continue its commitment to comprehensive and sustainable waste solutions; strengthen the foundation for sustainable long-term growth as a comprehensive service provider; create significant synergies and grow WM’s earnings and cash flows.
WM expects the deal to generate more than $125 million in annual run-rate synergies. And these synergy opportunities are driven by WM’s logistics expertise, its track record of using technology to optimize operating and SG&A costs, and its industry-leading disposal asset network. The Stericycle acquisition is expected to be accretive to WM’s earnings and cash flows within one year of close.
Plus this deal will support WM’s capital allocation priorities. WM’s strong balance sheet and significant cash flow generation position it well to fund the acquisition. This year, WM’s operating cash flow will continue to be directed to organic growth investments in WM’s recycling and renewable energy businesses, capital expenditures to support its base business, dividend payments, and acquisitions.
This acquisition will enhance WM’s cash flow growth and support its commitment to growing shareholder returns. WM currently expects to achieve targeted leverage and return to normal run-rate share repurchases within 18 months of the acquisition’s close.
The deal is not subject to a financing condition. And WM plans to finance the transaction using a combination of bank debt and senior notes.
In the near term, following the completion of the transaction, WM expects a net debt-to-EBITDA ratio of approximately 3.4x.
The deal, which was unanimously approved by the boards of directors of both companies, is expected to close as early as the fourth quarter of 2024, subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by a majority of the holders of Stericycle’s outstanding common shares.
Centerview Partners is serving as exclusive financial advisor to WM, and Vinson & Elkins and Baker Botts are serving as WM’s legal counsel. And BofA Securities is serving as exclusive financial advisor to Stericycle, and Latham & Watkins is serving as Stericycle’s legal counsel.
KEY QUOTES:
“At WM, we are committed to maximizing value for all our stakeholders by providing a comprehensive suite of environmental solutions to the market. The acquisition of Stericycle is a significant step in advancing this commitment because it broadens the scope of our service offerings, bringing together the leader in solid waste and a premier company in regulated medical waste services. We have a proven track record of integrating and optimizing acquired businesses that benefit our customers and employees and deliver a strong return on investment for our shareholders. We look forward to working with the Stericycle team to capture the strategic, customer service, environmental, and financial benefits of this acquisition.”
– Jim Fish, President and Chief Executive Officer of WM
“Our sustained focus and commitment to transforming our business over the past five years has uniquely positioned Stericycle for this transaction, which creates significant value for shareholders, unlocks new opportunities to deliver diversified services to customers, and supports investment in the growth and development of our team members. As customers seek to manage a greater volume and variety of materials in a safe, responsible, and sustainable way, Stericycle’s knowledge and expertise in regulated medical waste and secure information destruction are compelling additions to WM’s broad portfolio of environmental solutions. We are proud of all that we’ve accomplished to shape a healthier and safer world and look forward to our future as part of WM.”
– Cindy J. Miller, Stericycle’s President and Chief Executive Officer
