Call it the great garbage war of 2008.
The largest competitors in the waste-hauling business are battling to increase their market share and capital dominance.
Last month, Republic Services, the third-largest hauler, announced it is purchasing Scottsdale-based Allied Waste Industries, the second-largest, in a $6.07 billion stock deal expected to close by the fourth quarter.
On Monday, Waste Management Inc., the largest hauler, made an unsolicited offer to buy Republic Services for $6.19 billion in cash, hoping to trash an Allied Waste-Republic Services pairing.
"Our $34-per-share, all-cash proposal clearly offers a better and more certain value alternative to Republic stockholders than the recently announced Republic-Allied Waste" transaction, David Steiner, Waste Management's CEO, said in a statement. "We look forward to a prompt determination from Republic's board and to initiating cooperative efforts to bring our proposal to Republic's stockholders."
If Waste Management is able to purchase Republic Services, it expects the combination to boost its earnings in the first year and provide cost savings of at least $150 million.
"The primary reason we'd like to do this deal with Republic is because it is enhancing to Waste Management's financial goals," said Lynn Brown, Waste Management's corporate spokeswoman. "Where priorities are earnings growth, margin expansion, cash flow, free cash and increasing ... returns on our invested capital, this acquisition will be good to help us attain all those goals."
Republic Services' board will decide whether Waste Management's proposal moves forward, said Will Flower, corporate spokesman.
"The board of directors of Republic Services along with our legal and financial advisers will carefully review the proposal received from Waste Management," he said. "It's in the board of directors' hands right now. They obviously have a fiduciary responsibility to act in the best interest of our shareholders, and they will do that."
The board will review the proposal and respond to Waste Management, Flower said.
"What's most important to understand is that Republic Services and Allied have signed a definitive merger agreement that firmly establishes the company as the nation's leading environmental services provider," he said. "That agreement is in place and we are still moving ahead with that merger."
James Zeumer, Allied Waste spokesman, couldn't be reached for comment.