Waste Management Inc, the largest US trash hauler, raised its unsolicited take-over bid for rival Republic Services Inc by about 9 percent to $6.7 billion on Monday to try to thwart Republic's agreement to acquire Allied Waste Industries Inc.
Republic Services' board will review the proposal as its fiduciary duty requires and respond after its review, company spokesman Will Flower said. Waste Management offered $37 per share in cash, up from its original offer of $34 a share. The new bid represents a 33 percent premium to Republic's share price prior to Waste Management's first bid.
Last month, Republic rejected the original $6.2 billion offer, and its largest shareholder, Bill Gates's investment arm, asked Waste Management to walk away.
In improving its bid, Waste Management said it would pay Republic a $250 million break-up fee if the deal were blocked by antitrust regulators and offered interest if the deal fails to close by a set date.
Waste Management said it already has met with US Department of Justice antitrust officials to discuss its bid and believes a deal could close by late 2008 or early 2009. It expects it would have to divest assets to gain regulatory approval. Waste Management also said it had confirmed that financing would be available and expects to get commitment letters from lenders once it begins discussions with Republic. It said the deal would generate benefits 25 percent to 35 percent higher than its original estimate of $150 million.
In June, Republic agreed to buy Allied in an all-stock deal worth, at Republic's current share price, $6.32 billion, or $14.63 per share. Republic and Allied were not immediately available for comment on the new Waste Management offer.
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