2 of America's biggest waste-management companies are joining forces in a $4.9 billion deal

  • Waste Management and Advanced Disposal, two of America's largest waste-management companies, are joining forces in a $4.9 billion deal.
  • Advanced Disposal's shares surged 20% on the news.
  • The tie-up is expected to immediately boost earnings and cash flow, and generate $100 million in annual savings by cutting costs and slashing capital spending.
  • Watch Waste Management and Advanced Disposal trade live.

America's largest waste-management company is snapping up the nation's fourth-largest solid-waste company in a $4.9 billion deal, marking one of the biggest acquisitions in the waste collection, recycling, and disposal spaces in more than a decade.

Texas-based Waste Management has agreed to acquire Florida-based Advanced Disposal for about $2.9 billion in cash, and will take on $1.9 billion in net debt from its smaller rival. Advanced Disposal shareholders are set to receive $33.15 in cash for each share they hold — roughly a 21% premium to the company's average share price over the past month. Advanced Disposal's shares surged 20% on the news. 

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Waste Management expects the deal, the largest in its history according to the Wall Street Journal, to close by the first quarter of 2020. It predicts Advanced Disposal's customers and complementary assets — which include 94 collection operations, 73 transfer stations, 41 landfills and 22 recycling facilities — to immediately boost its earnings and cash flow, enabling it to ramp up share repurchases. It also anticipates $100 million in annual savings from cost-cutting and reductions in capital spending.

Revenue at Waste Management grew 3% to almost $15 billion in 2018, driving pre-tax income up 8% to about $2.4 billion. Advanced Disposal's sales also rose 3%, to about $1.6 billion, swinging the company from a pre-tax loss of $3 million in 2017 to a $14 million profit.

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