OK $7.3 billion
Browning-Ferris, Oahu's topFrom staff and wire reports
private refuse hauler, is being
bought by Allied Waste
NEW YORK -- Allied Waste Industries Inc. is buying larger rival Browning-Ferris Industries Inc. for $7.3 billion in cash in a deal combining the second- and third-largest trash hauling concerns in North America.
The deal would enable Allied Waste to expand into BFI's territory in the Western United States.
That territory includes Hawaii, where BFI became Oahu's biggest commercial trash hauler with its February 1998 acquisition of a competitor.
BFI is now estimated to have more than half the private waste removal business on Oahu.
After the deal announced today, the combined company's $6.6 billion in annual revenue would still be second in the solid waste services business behind Waste Management Inc., which had $12.7 billion in revenue last year.
Allied Waste is offering $45 a share for BFI, almost a 30 percent premium over Friday's closing stock price of $34.75 on the New York Stock Exchange. Allied Waste also will assume $1.8 billion in debt. Shares of Allied Waste closed $15 Friday on the NYSE.
In trading today, Allied Waste shares rose $1.94 to close at $16.94; BFI's stock gained $4.121/2 to close at $38.871/2.
The new company, which would be called Allied Waste Industries, would be headed by Allied Waste chairman and chief executive Thomas H. Van Weelden and the current Allied Waste management team. It would be based at Allied Waste's headquarters in Scottsdale, Ariz.
The combined companies expect to save more than $250 million a year by cutting overhead and duplication. Allied also is expected to sell almost $1 billion in nonstrategic businesses.
Allied Waste, the smaller of the two companies, operates primarily in the Midwest and Northeast. The third largest concern in the U.S. solid waste business, it had revenue of $1.6 billion in 1998, 7,500 employees and operations in 28 states.
Houston-based Browing-Ferris is the nation's second-biggest trash hauler with revenue of about $4.1 billion last year and 26,000 employees. Its worldwide revenue amounted to about $4.7 billion last year.
It operates more than 90 solid-waste landfills, about 30 medical-waste landfills and about 90 recycling facilities throughout North America. BFI collects solid waste in 46 states, Puerto Rico and Canada.
The deal has been approved by the boards of directors of both companies.
It must be approved by Browning-Ferris shareholders and get regulatory clearance, but is expected to close before October.