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Allied Waste, BFI ink deal
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March 8, 1999: 8:29 a.m. ET
$9B combination creates 2nd largest global waste-disposal company
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NEW YORK (CNNfn) - Waste companies Allied Waste Industries and Browning Ferris Industries announced Monday they will merge in a cash and debt deal valued at $9.1 billion.
Under the agreement, Scottsdale, Ariz.-based Allied (AW) will pay $45 in cash per BFI share and assume $1.8 billion of the company's debt. The newly-formed entity, to be called Allied Waste Industries Inc., will be the second largest solid waste services company in the world.
The company, to be headquartered in Scottsdale, will have about $6.6 billion in annual revenues and include a nationwide network of waste collection, transfer, recycling and landfill facilities.
Allied and Houston-based BFI (BFI) have been linked before. Last June, the pair were rumored to be combining in a merger that was then said to be worth $7 billion.
In February, the two companies agreed to swap certain aspects, with Allied taking territories from BFI in location including New Jersey, midtown Chicago and St. Louis, while BFI took assets from Allied in places such as Boston, Atlanta and Chicago.
Allied, a vertically integrated, non-hazardous solid waste management company, is ranked No. 5 in the industry by revenues, serving 1.4 million customers in 18 U.S. states.
BFI, which is involved in a number of areas involving transport, disposal and recycling of residential and industrial wastes, medical waste services and waste-to-energy conversion, is No. 2 in the industry, with $4.7 billion in revenues last year.
The deal represents a homecoming of sorts of Allied Waste CEO Roger Ramsey. He was a co-founder of BFI in 1968 and served as its president until 1976.
The combination comes in an industry that is ripe for consolidation. In December, No. 1 industry player Waste Management (WMI) agreed to spin off several landfills, transfer stations and collection routes under a deal with state and federal regulators allowing the garbage-disposal giant to consummate its $1.2 billion acquisition of Eastern Environmental Services (EESI).
And last August, Allied pushed into the industry's first tier when it announced the acquisition of American Disposal Services Inc., a regional competitor, in a stock swap valued at about $1.1 billion.
Allied Waste's stock plummeted in Friday trade on the New York Stock Exchange, losing a quarter of its value to close down 5 at 15. BFI shares gained 1 to close at 34-3/4.
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