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Law360 (June 24, 2020, 5:30 PM EDT) -- Waste Management and Advanced Disposal Services said Wednesday they chopped the value of their planned tie-up to $4.6 billion and lined up a divestiture to help gain regulatory approval for the deal, a pair of moves shaped by five law firms.
Plans for Houston-based Waste Management Inc., advised by Vedder Price PC and Simpson Thacher & Bartlett LLP, to buy Advanced Disposal Services Inc., guided by Mayer Brown LLP and Shearman & Sterling LLP, were valued at $4.9 billion when they were announced in April 2019. However, the transaction was delayed following a review by the antitrust division of the U.S. Department of Justice and because of the effect of the novel coronavirus.
"Over the last several months, as we have worked to gain regulatory approval from the U.S. Department of Justice, we have become increasingly convinced that the people and customer additions this acquisition brings to Waste Management will be of tremendous value and we are confident that Waste Management's operational excellence will allow us to achieve expected synergies," Jim Fish, president and CEO of Waste Management, said in a statement.
The revised deal outlined Wednesday, which includes the assumption of Advanced Disposal's $1.8 billion in net debt, calls for Waste Management to pay $30.30 for each outstanding share of its Ponte Vedra, Florida-based target, the companies said. Last year, Waste Management said it would buy the shares at $33.15 each and assume approximately $1.9 billion of Advanced Disposal's debt.
And in a bid to win antitrust approval from DOJ, the companies are also selling off $835 million of their assets to Canadian trash hauler and Latham & Watkins LLP client GFL Environmental Inc. As part of that transaction, GFL said it will enter into a five-year disposal arrangement with Waste Management that will provide it with competitive and stable pricing.
The divestiture also includes the sale of 32 garbage collection operations, 36 transfer stations, 18 landfills across 10 U.S. states and 380 collection vehicles, according to a separate statement from Vaughan, Ontario-based GFL. Together, the assets are expected to generate annual revenue of around $345 million.
"This transaction presents GFL with a unique opportunity to significantly expand our U.S. footprint through the acquisition of a high quality, vertically integrated set of assets in both our existing and adjacent fast growing U.S. markets," Patrick Dovigi, founder and CEO of GFL, said in a statement.
The agreement is contingent upon the successful closing of Waste Management's acquisition of Advanced Disposal and is also subject to other customary closing conditions, including approval by DOJ. The companies expect to complete the deal during the third quarter of this year.
When the deal was announced last year, Waste Management and Advanced Disposal said they planned to close the transaction in the first quarter of 2020.
"We believe the revised agreement with Waste Management, coupled with our joint agreement to sell substantially all of the divestitures to GFL Environmental, delivers significant value and certainty of closing to Advanced Disposal stockholders," Advanced Disposal CEO Richard Burke said.
"We continue to work hand in hand with the Waste Management team, GFL Environmental, and the U.S. Department of Justice to gain regulatory clearance and complete the transaction," he added.
The Waste Management-Advanced Disposal deal is now expected to close by the end of the third quarter of 2020. Canada Pension Plan Investment Board, which owns a roughly 18% stake in Advanced Disposal, agreed to vote in favor of the revised deal.
Representatives for Waste Management and Advanced Disposal declined to comment beyond their public statements. A spokesperson for GFL did not immediately respond to a request for comment.
Waste Management's financial adviser is Centerview Partners LLC and it's represented by Brian McCalmon, Josh Dunn and Jani Mikel of Vedder Price PC, as well as a Simpson Thacher team including Alan Klein, Chris May, Jacqui Bogucki, Nate Bascom, Hunter Hampton, Braxton Pitts, Brian Robbins, Jamin Koslowe, Pasco Struhs, Michael Isby, Krista McManus, Dennis Loiacono, John Creed, Tyler Robbins, Sergio Torres, Brian Steinhardt, Brian Rosenzweig, Brian Mathes, Peter Guryan, Joshua Hazan and Melanie Jolson.
Advanced Disposal is represented by Mayer Brown and by a Shearman & Sterling team including Scott Petepiece, Daniel Litowitz, Jessica Delbaum, Richard Alsop, Gillian Emmett Moldowan, Grace Jamgochian, and Alan Goudiss.
Advanced Disposal's financial adviser is UBS Investment bank, which is represented by a Sullivan & Cromwell LLP team including corporate partner Melissa Sawyer and associate Kathy X. Wang.
GFL's financial adviser is Barclays and it's represented by a Latham & Watkins team including Paul Kukish, Mikael Vardanyan, Stelios Saffos, Matthew Villar, Brittany D. Ruiz, Jordan Browdy, Sophia Choi, Austin Ozawa, Nineveh Alkhas, Juliet Rognlie, Matthew Dewitz, Dara Denberg, Elizabeth Vinci, Jeffrey Tochner, Pelin Serpin, Gary Gengel, Amanda Reeves, Lindsey Champlin and Qingyi Pan.
--Additional reporting by Benjamin Horney. Editing by Michael Watanabe.
Update: This article has been updated with additional counsel information for GFL and UBS.
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