WASHINGTON -- Waste Management Inc., the largest U.S. trash-disposal company, said yesterday that it plans to complete its $1.1 billion acquisition of rival Eastern Environmental Services Inc. after settling charges lodged by state and federal antitrust officials.
The settlement, which resolves a legal dispute that had blocked the acquisition for six weeks, clears the way for the companies to close the transaction.
The accord allows Waste Management to refocus its attention on building its share of the $40 billion North American waste disposal business. The agreement lets Houston-based Waste Management acquire a rival with business from New York to Florida.
"These guys are now saying, 'OK, it's done, now let's go out and attack the marketplace,' " said Jeffrey Pittsburg, a Goldis-Pittsburg Institutional Service analyst. "It's a positive because the focus is going to be back on competition."
Shares of Eastern Environmental, based in Mount Laurel, N.J., rose $1.50 yesterday to close at $29.625. Waste Management rose $1.6875 to close at $46.625.
The key legal issue blocking the acquisition involved New York City's plan to offer $6 billion in contracts to haul garbage from the largest U.S. city over a 20-year period.
Waste Management and Eastern were two of three finalists for those contracts. Although they were vying for business in different parts of the city, the Justice Department and New York state said in a lawsuit filed Nov. 17 that the combination would reduce competition for waste disposal in the city.
Under the settlement, Eastern will transfer the rights to its proposal to another company, most likely Republic Services Inc. The companies are negotiating the terms of that transfer.
In addition, the settlement requires the combined company to sell three New York City transfer stations, which are used to process and store commercial garbage before shipment to a final disposal site.
The agreement also resolves a dispute over which of several Waste Management transfer stations the company must sell under an earlier settlement that permitted its combination with USA Waste Services Inc.
The agreement also resolves charges raised by the states of Florida and Pennsylvania. Among other things, the combined company will sell three landfills in Pennsylvania.
The acquisition will create a company with annual sales of about $13 billion. Despite the divestitures, Waste Management will benefit from its new ability to consolidate the New York, New Jersey and Pennsylvania waste markets, said Cotton Swindell, a BT Alex. Brown analyst.
Pub Date: 1/01/99