Houston garbage giant Waste Management Inc. (WM) announced Monday it agreed to acquire medical refuse provider Stericycle for $7.2 billion, including $1.4 billion of net debt.
The $62 per share cash price represents a 24 percent premium over Stericycle’s 60-day volume weighted average price as of May 23, which was the last trading day before the Wall Street Journal reported that Stericycle was considering a potential sale.
The transaction is expected to close as early as the fourth quarter if it clears regulators and a majority of the holders of Stericycle’s outstanding common shares.
Centerview Partners advised WM, which used Vinson & Elkins and Baker Botts as outside counsel. BofA Securities assisting Stericycle, which tapped Latham & Watkins as legal counsel.
The V&E team was led by partners Steve Gill, Doug McWilliams, Ron Tenpas and Palmina Fava with assistance from associates Chandler Jones, John Sasso, Phil Greenfield, Lauren Perillo and Jack Kimmel.
Also advising were associate Tiffany Monroy; partner David D’Alessandro, counsel Melissa Spohn and associates Hayden Rutledge and Henry Crowell; partner Matt Dobbins and associate Kevin Moscon; partner Becky Baker and associates Ashley Plunk and Jordan Peck; partners John Lynch, Lina Dimachkieh, counsel Peter Rogers and associate Steve Campbell; partner Dave Wicklund and counsel Zach Banks; partner Jamie Leader and associates Maggie Eller and Josh Hasler; partner Prentiss Cutshaw, counsel Ken Adler and senior associate Bryant Buechele; counsel Rajesh Patel and associate Haley Titcomb; and partner Michael Kurzer and associate Sean Dao.
From Baker Botts, the team included partners Jim Kress and Jeffrey Oliver and special counsel Christina Ryu-Naya in Washington, D.C., and partners David Cardwell and Matthew Levitt and counsel Sofia Doudountsaki in Brussels. A spokesman said in an email that the firm’s role included antitrust and foreign direct investment.
At Latham, the group was led by Chicago M&A partners Bradley Faris and Max Schleusener and Chicago partner Terra Reynolds, vice chair of the firm’s healthcare and life sciences industry group, but included Los Angeles/Houston partner Joshua Marnitz on environmental matters.
WM’s chief legal officer is Charles Boettcher, who is also the company’s corporate development chief. Before joining, he worked in the energy industry: as general counsel and CFO of Oilfield Water Logistics and before that as GC of Eagle Rock Energy Partners. Previously he was a partner at Thompson & Knight in Dallas. He serves on the board of Performing Arts Houston and is a member of energy law advisory board at his alma mater, Texas Tech University School of Law.
The target, Bannockburn, Ill.-based Stericycle, provides regulated medical waste and compliance services as well as secure information destruction services.
Jim Fish, WM’s president and CEO, said in a statement that the acquisition broadens the scope of its service offerings. His counterpart at Stericycle, Cindy Miller, said the company’s focus and commitment to transforming its business over the past five years has positioned it for this transaction, which creates value for shareholders and unlocks opportunities to deliver services to customers.
WM said it expects the deal to expand its already extensive environmental service offerings, continue its commitment to comprehensive, sustainable waste solutions, strengthen the foundation for sustainable long-term growth as a comprehensive service provider, generate more than $125 million in annual run-rate synergies and grow WM’s earnings and cash flows; and support its capital allocation priorities.
The company expects to achieve leverage and return-to-normal run-rate share repurchases within 18 months of the transaction’s close.
WM intends to finance the transaction using a combination of bank debt and senior notes (the deal isn’t subject to a financing condition).
In the near term after closing the deal, WM expects a net debt-to-EBITDA ratio of around 3.4 times. The company has a goal of achieving a leverage ratio within its targeted net debt-to-EBITDA range of 2.75 to 3 times about 18 months after close.