(Source: MARKETWIRE)
IESI-BFC Ltd. ("IESI-BFC") (TSX: BIN)(NYSE: BIN) and Waste Services,
Inc. ("WSI") (NASDAQ: WSII) today announced that their respective
boards of directors have each approved a definitive merger agreement
that establishes North America's third largest solid waste management
company with expected pro forma annual revenues of nearly US$1.5
billion. The combined company, to be headquartered in Toronto, will
have more than 6,000 employees serving commercial, industrial and
residential customers in 11 U.S. states and the District of Columbia,
and in six Canadian provinces. The transaction, which is expected to
close during the first calendar quarter of 2010, is expected to
generate US$25-$30 million in net pre-tax annual run rate synergies
by the end of the second year following closing, and to be accretive
to IESI-BFC's earnings and free cash flow per share in the first year
following closing.
Under the terms of the agreement:
- IESI-BFC will issue 27.8 million common shares to WSI shareholders,
representing approximately 23% ownership in the combined company,
assuming conversion of IESI-BFC's Participating Preferred Shares.
- The exchange ratio is 0.5833 common shares of IESI-BFC for each WSI
common share held.
Based on the closing stock prices of both companies on Tuesday,
November 10, 2009, this represents a premium of approximately 27%
over the volume weighted average closing price of WSI's shares for
the previous 30 trading days of US$6.10. This premium reflects a
fully-diluted share count for WSI at closing of 47,660,982, which
includes restricted share units vesting on change of control, as well
as in-the-money options.
The acquisition will combine IESI-BFC's and WSI's collection,
transfer, recycling and landfill businesses under a proven management
team led by Keith Carrigan, IESI-BFC's Vice Chairman and Chief
Executive Officer. The combined company will be diversified across
U.S. and Canadian markets, customer segments and service lines, while
maintaining a commitment to excellent customer service, environmental
stewardship, and community support. The combined company will use its
excess free cash flow to fund organic growth, maintain IESI-BFC's
regular quarterly dividend payments to shareholders, finance
accretive strategic acquisitions and reduce debt.
"In uniting with WSI, IESI-BFC will advance to a top-three position
in the North American solid waste management industry," said Keith
Carrigan, Vice Chairman and Chief Executive Officer of IESI-BFC.
"More importantly, this transaction will allow our two companies to
grow more meaningfully than they could on their own. Through this
combination, we will increase our internalization in the Canadian
market, where we have demonstrated our ability to improve margins by
applying our highly successful business model. We will also establish
a meaningful presence in the Florida market, where WSI has initiated
a vertical integration strategy centred around the JED landfill, one
of the most valuable solid waste assets in the state. Since 2004, WSI
has made steady improvements in Florida, where it achieved an
adjusted EBITDA margin of 27.2% in the third quarter ended September
30, 2009. By applying IESI-BFC's operating model, strong balance
sheet, and acquisition strategy centred on creating collection
density for landfills, we will be able to accelerate the Florida
growth strategy and margin improvement, driving incremental value for
the combined company's shareholders.
"We expect that synergies will be available from the reduction of
operating, general and administrative costs, and that additional
growth for the combined entity will flow from IESI-BFC's history of
accelerating value through its assets. As such, we expect the
transaction will be accretive to shareholders, generating significant
additional cash flow. We will maintain a strong balance sheet on
closing, with pro forma debt-to-EBITDA of 2.70x, and expect this
level to decline to below our stated 2.50x target within the first
year following closing."
David Sutherland-Yoest, President and Chief Executive Officer of WSI,
said, "We are very familiar with IESI-BFC, its management team,
unique operating model, bottom-up management style, and industry
leading record of organic growth. The transaction with IESI-BFC will
enable WSI to execute its operating and growth strategies more
effectively and participate in the enhanced profitability of the
combined entity, while continuing to provide our customers with the
top-notch service they have come to expect. IESI-BFC has a robust
asset base in Canada, the U.S. Northeast and the U.S. South, a
history of margin expansion, and a strong balance sheet. Its regular
quarterly dividend, which the combined company expects to maintain,
will serve as a source of additional return to our shareholders."
Additional Transaction Details
In connection with the transaction, IESI-BFC will utilize a portion
of its available credit capacity of US$435 million as of September
30, 2009, and will increase the size of its Canadian revolving credit
facility from CAD$305 million to approximately CAD$450 million. The
existing debt of IESI-BFC's U.S. revolving credit facility will
remain outstanding immediately after closing.
Following completion of the transaction, Keith Carrigan will become
Vice-Chairman and Chief Executive Officer of the combined company.
WSI's largest shareholders, Westbury (Bermuda) Ltd. (owner of
12,607,365 shares), and Kelso & Company, L.P.
