Waste Management drops takeover bid

HARTFORD, CONN. —  Waste Management Inc., the nation’s largest garbage hauler, on Monday withdrew its $6.73-billion bid to acquire smaller rival Republic Services Inc., saying the move wouldn’t be prudent given current financial market turmoil.

The announcement ends a three-month takeover struggle that began in July when Houston-based Waste Management first offered to buy rival Republic Services, the nation’s No. 3 trash hauler, and continued when Waste Management sweetened its takeover bid in August.

The moves were seen as an effort to derail an earlier deal between Republic Services and Allied Waste Industries Inc., the second-largest player in the industry.

On Monday, Waste Management said it wouldn’t risk its strong financial position to engineer a hostile takeover. Chief Executive David Steiner said the credit crisis motivated Waste Management to drop its bid.

“Quite frankly, it came down to the credit markets,” he said. “We’re certainly not willing to pick up assets at any price or if we believe it would create undue risks to our business model.”

In August, Waste Management raised its buyout offer to $37 a share after Republic swiftly rejected an earlier $34-per-share bid, saying the offer undervalued the company and was an attempt to disrupt its own acquisition plans.

The $6.73-billion offer represented a nearly 33% premium to Republic’s closing stock price on July 11, the last trading day before Waste Management announced its first offer. Republic at the time said it believed that its proposed combination with Allied offered more value and certainty for shareholders and was moving forward with that deal.

Amid a broad rally Monday on Wall Street, Republic Services shares gained $2, or 8.9%, to $24.50, while Allied Waste jumped $2.10, or 24.6%, to $10.64.

Waste Management shares advanced $4.63, or 18%, to $30.39. They have fallen more than 20% since July 11, the last day of trading before the company announced its offer for Republic.