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Waste Connections and Progressive Waste Soar on Merger Agreement

Chris Lange

Published: January 19, 2016 11:55 am

Last Updated: January 13, 2020 2:52 pm

Waste Connections Inc. (NYSE: WCN) and Progressive Waste Solutions Ltd. (NYSE: BIN) led the bulls in Tuesday’s session on news of a merger. These companies announced that they have entered into a definitive agreement to merge in an all-stock transaction.

Upon the completion of the transaction, Waste Connections stockholders will own roughly 70% of the combined company, and Progressive Waste shareholders will own approximately 30%. The transaction has been unanimously approved by the boards of both companies.

The transaction was negotiated on the basis of an implied exchange ratio of 0.4815 of a share of Waste Connections for each share of Progressive Waste.

The transaction value represents an approximately 16% premium to Progressive Waste’s 20-day volume-weighted average stock price prior to the announcement on January 4.

The combined company will use the Waste Connections name, and it is anticipated that its shares will trade on the New York Stock Exchange and the Toronto Stock Exchange. It is expected to close in the second quarter of 2016.

Ronald J. Mittelstaedt, CEO and chairman of Waste Connections, commented:

Under our leadership, we believe we can instill the corporate culture, safety focus, operational excellence and accountability that have served us so well and which we believe are necessary for long-term success within Progressive Waste’s complementary markets. These improvements, together with expected immediate synergies and other cash flow benefits, should accelerate value creation for both companies’ shareholders. In addition, to maintain our strategic market differentiation and drive further value creation, we expect to either divest or swap assets within certain U.S. markets as we believe between 85% and 90% of Progressive Waste’s revenue is consistent with our differentiated tenets.

Shares of Waste Connections were trading up 5.5% to $53.81 on Tuesday, with a consensus analyst price target of $58.91 and a 52-week trading range of $42.98 to $57.65.

Progressive Waste Solutions shares were up 6.8% to $25.11 on Tuesday, within a 52-week trading range of $20.81 to $30.74. Its consensus price target before the news was $28.61.