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Republic dumps waste unit
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May 13, 1998: 1:13 p.m. ET
Huizenga's brainchild may find pot of gold in splitting off solid-waste division
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NEW YORK (CNNfn) - Republic Industries Inc., in a move signaling confidence in its auto business, said Wednesday it plans to split off its solid-waste division into a separate company.
The waste unit has been used by its hi-profile chief executive officer, H. Wayne Huizenga, as a cash cow while Republic evolved into the nation's leading chain of car dealers.
Republic said Wednesday it has filed a registration statement with the Securities and Exchange Commission to offer shares through an initial public offering, which is expected to be completed in the second or third quarter.
Republic expects to reap $1.5 to $2 billion through the sale of its stake in the new stand-alone company, using proceeds to both grow internally and finance acquisitions.
Wall Street applauded the move, which follows several years of consolidation in waste management. Republic Industries shares (RII) were up 7/8 at 27-1/2 at midday Wednesday.
"It's a signal of increasing confidence and optimism in how the auto side is functioning," said Ursula Moran, a retail analyst at Sanford C. Bernstein.
"And it makes the company easier for Wall Street and investors to understand," she said. "I know of few experts in the automotive, retail and waste sectors. Some of that problem goes away."
Republic Industries is the parent of the AutoNation car dealer chain and the Alamo, Spirit and National car rental chains.
Two months ago, rivals USA Waste Services Inc. and Waste Management Inc. inked a $15 billion merger, which combined two acquisitive players in solid-waste management.
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