- Advanced Disposal Services is one step closer to completing its sale to Waste Management. Nearly 86% of shareholders approved the deal to sell at $33.15 per share at a special meeting in Ponte Vedra, Florida on Friday.
- Ahead of the vote, Advanced also addressed three putative class action lawsuits alleging it had misled investors with insufficient information, allowed the company to be undervalued and limited the potential for higher offers, among other claims. The various suits sought to delay the vote or prohibit the deal.
- The parties agreed to dismiss the suits because Advanced agreed to provide supplemental information on the deal, but the company still "denies all allegations in the Merger Litigation that any additional disclosure was or is required." Each of the two federal suits in Delaware were dismissed on Friday. The third, in Florida circuit court, is pending.
The successful vote and lawsuit dismissals are a notable step for what's estimated to be a $4.9 billion deal when factoring in debt.
While the initial meeting was postponed, this outcome was expected as the company's largest shareholders — the Canada Pension Plan Investment Board — previously agreed to vote in favor.
Waste Management has been described as a natural fit for the deal, and subsequent filings from Advanced on negotiations bear out why hopes about better offers may have been optimistic. According to a May 23 proxy filing, Advanced was approached by two other companies in the second quarter of 2018 about a potential deal. Discussions continued through the summer, but both companies ultimately concluded they weren't willing to make a sufficient offer.
The identities of these companies have not been confirmed. One is described as "a substantial industry participant," while the other as "a financial sponsor with significant industry experience."
During Q1 earnings calls in April, shortly after the deal was announced, Republic Services and Waste Connections said they would have considered acquiring Advanced, but didn't specify when. In May, during WasteExpo's investor summit, GFL Environmental also said the company's assets were an attractive fit.
GFL's Oct. 10, 2018 announcement to acquire Waste Industries has been described as a potential limitation of Advanced Disposal's growth options. It may have also been a factor in the deal at hand.
The filing shows Waste Management CEO Jim Fish called Advanced CEO Richard Burke on Oct. 11 to request a meeting to express interest in buying the company.
The two companies entered a mutual confidentiality agreement the day after Thanksgiving, and negotiations continued for the next four-plus months before a final deal was announced on April 15.
Advanced did have internal discussions about seeking other offers during that time — including from the previously interested buyers — but never did, for fear of leaks and assumptions that no one else could do better. After multiple rounds of negotiations — in which Waste Management started with $32 per share and Advanced asked for $34.50 — the two landed on $33.15.
Both parties project the deal will close by Q1 of 2020, pending necessary regulatory approval from the Department of Justice.
Per the deal, Waste Management is prepared to sell up to $200 million worth of assets for any required divestments. Numerous competitors are poised to buy whatever they can. If all goes according to plan, this will go down as one of the industry's largest acquisitions in recent history and the largest for Waste Management since its late '90s deal with USA Waste.