WM to acquire Stericycle for $62.00 per share in cash

Waste Management (WM) and Stericycle (SRCL) announced that they have entered into a definitive agreement under which WM will acquire all outstanding shares of Stericycle for $62.00 per share in cash, representing a total enterprise value of approximately $7.2B when including approximately $1.4B of Stericycle’s net debt. The per share price represents a premium of 24% to Stericycle’s 60-day volume weighted average price as of May 23, which was the last trading day before an article reported that Stericycle was considering a potential sale. WM expects the transaction to generate more than $125M in annual run-rate synergies. The Stericycle acquisition is expected to be accretive to WM’s earnings and cash flows within one year of close. WM currently expects to achieve targeted leverage and return to normal run-rate share repurchases within 18 months of the acquisition’s close. The transaction is not subject to a financing condition. WM intends to finance the transaction using a combination of bank debt and senior notes. In the near term, following completion of the transaction, WM expects a net debt-to-EBITDA ratio of approximately 3.4x. The company has a long-standing commitment to a strong balance sheet and solid investment grade credit profile and expects its prudent approach to capital allocation, including a temporary suspension of share repurchases, to position it to achieve a leverage ratio within its targeted net debt-to-EBITDA range of 2.75x to 3.0x approximately 18 months after closing the transaction. The transaction, which was unanimously approved by the boards of directors of both companies, is expected to close as early as the fourth quarter of 2024, subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by a majority of the holders of Stericycle’s outstanding common shares.