Waste Connections buying Progressive Waste in all-stock deal

Finally, Beacon Capital Management bought a new stake in Waste Connections during the fourth quarter valued at approximately $0.

Progressive’s shares rose after stock markets opened, gaining about 4 per cent in Toronto and 8 per cent in NY.

Texas-based Waste Connections Inc. will buy Ontario-based Progressive Waste Solutions Ltd.at $24.55 per share in an inversion deal that will see the combined company domiciled in Canada following the deal’s expected close in the second quarter of 2016. The stock had a trading volume of 213,680 shares. Waste Connections has a 52 week low of $42.98 and a 52 week high of $57.65. The firm’s 50-day moving average price is $54.76 and its 200-day moving average price is $51.29.

Similarly, in Texas and Florida, the Canadian company has a fully integrated collection and disposal business in a leading market position and “you could make the same statement about Louisiana, their position in Missouri”. The combination is expected to save $50 million in overhead costs with the merger. During the same period in the previous year, the company posted $0.36 earnings per share.

The transaction was negotiated on the basis of an implied exchange ratio of 0.4815 of a share of Waste Connections for each share of Progressive Waste.

The free cash flow characteristics of the combined company support the continued payment of a quarterly dividend to shareholders, the news release states. Investors of record on Thursday, December 31st were given a dividend of $0.1293 per share.

Because it is an all-stock transaction, leverage for the combined company should remain at approximately three times debt to EBITDA (earnings before interest, taxes, depreciation and amortization) upon completion of the transaction, Progressive Waste and Waste Connections say. Zacks Investment Research lowered shares of Waste Connections from a “hold” rating to a “sell” rating in a research report on Wednesday, October 28th.

Brokerage firms have assigned a short-term price target of $58.857 to Waste Connections, Inc.

Mittelstaedt said the combined company will generate about 15 per cent of its revenue in Canada through Progressive, 25 per cent from what is now Waste Connections’ west region, 25 per cent from its east region and 25 per cent from a new south division that includes parts of both companies.