Republic rejects Waste Management unsolicited bid

In a stinging letter Friday, garbage hauler Republic Services Inc. rejected an unsolicited $6.19 billion cash offer from larger rival Waste Management Inc., saying the proposal "seriously undervalues" its company.

Republic, the nation's third-largest waste collector, instead wants to stick with its own deal announced last month to buy No. 2 Allied Waste Industries Inc. The all-stock agreement was worth about $6.07 billion at the time.

"Republic is not for sale," James O'Connor, the company's chairman and CEO, wrote to David Steiner, CEO of Houston-based Waste Management, in a letter dated July 18.

The investment office that manages the assets of the Bill & Melinda Gates Foundation Trust also disagreed with the deal. BGI owns 15.6 percent of Republic and 2.3 percent of Waste Management.

The investment office also thinks the deal undervalues the target company, lacks strategic rationale, and believes the regulatory process will be arduous and risky.

And it says Republic's shareholders would be best served by the proposed purchase of Allied.

Republic's O'Connor said the company's board was aware of its fiduciary duties, and that Republic remains off the market because of its prior agreement to buy Allied.

Financial analyses presented to officials of Republic and Allied support a valuation "substantially above" $34 a share, he said. Waste Management's proposal was announced Monday.

Waste Management's offer on Monday represented a 22 percent premium to Republic's closing stock price of $27.90 on July 11.