Waste Management (WM) will acquire all outstanding shares of Stericycle for $62.00 per share in cash, representing approximately $7.2 billion, including roughly $1.4 billion of Stericycle's net debt. The per share price represents a premium of 24 percent to Stericycle's 60-day volume weighted average.
Stericycle is a provider of regulated medical waste and compliance services as well as secure information destruction services.
Jim Fish, the president and chief executive officer of WM, says that the Stericycle acquisition is a big step in broadening WM's business.
"Our sustained focus and commitment to transforming our business over the past five years has uniquely positioned Stericycle for this transaction, which creates significant value for shareholders, unlocks new opportunities to deliver diversified services to customers, and supports investment in the growth and development of our team members," said Cindy J. Miller, Stericycle's President and Chief Executive Officer. "As customers seek to manage a greater volume and variety of materials in a safe, responsible, and sustainable way, Stericycle's knowledge and expertise in regulated medical waste and secure information destruction are compelling additions to WM's broad portfolio of environmental solutions."
The acquisition advances WM's growth strategy, underscores the importance of executing its sustainability initiatives, and aligns with its financial goals. Specifically, WM expects the addition of Stericycle to:
- Expand WM's environmental service offerings. The acquisition of Stericycle adds a platform of differentiated assets in the medical waste and secure information destruction industries to WM's suite of solutions. Given the growth outlook for healthcare services in North America, WM expects this business to deliver revenue growth that surpasses the fundamentals of its core solid waste business.
- Continue its commitment to waste solutions. This acquisition allows WM to continue its investment in growing North America's recycling infrastructure and increase the value of Stericycle's secure information destruction business.
- Strengthen the foundation for long-term growth as a service provider. The acquisition will bring together employees who are passionate about managing the environmental needs of communities. Integrating Stericycle into WM adds an operator in the healthcare and secure information destruction sectors – providing the option of partnering with a trusted provider known for safety, compliance, and environmental stewardship to solve their waste management needs.
- Create significant synergies and grow WM's earnings and cash flows. WM expects the transaction to generate more than $125 million in annual run-rate synergies. These synergy opportunities are driven by WM's logistics expertise, its track record of using technology to optimize operating and SG&A costs, and its disposal asset network. The Stericycle acquisition is expected to be accretive to WM's earnings and cash flows within one year of close.
- Support WM's capital allocation priorities. WM's strong balance sheet and significant cash flow generation position it well to fund the acquisition. In 2024, WM's operating cash flow will continue to be directed to organic growth investments in WM's recycling and renewable energy businesses, capital expenditures to support its base business, dividend payments, and acquisitions. The Stericycle acquisition will enhance. WM 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.
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.
