Street View: Waste Management's $7.2 bln buyout deal for Stericycle raises questions

Waste Management

04/06/2024 12:41

** Waste Management  WM.N  said on Monday it will take
Stericycle  SRCL.O  private in a deal valued at $7.2 billion
    ** WM will acquire Stericycle for $62 per share in cash, an
about 20% premium to the stock's Friday close
        
    DEAL RATIONALE UNCLEAR
    ** TD Cowen ("buy", PT: $235) says many investors felt the
valuation was too rich, Stericycle's profitability too low and 
WM's pitch to investors/analysts too skimpy for such a large
acquisition 
    ** "We think the industrial logic of the combination could
make a lot of sense, but WM has a lot of questions that need to
be answered" - TD Cowen 
    ** J.P. Morgan ("neutral", PT: $201.3) says the rationale
for acquiring SRCL a bit unclear. It is not obvious whether
there is great overlap between Stericycle's medical waste
customer base and WM's solid waste customer base for
cross-selling opportunities
    ** Truist Security ("buy", PT: $240) says the sale price
should be received well by SRCL shareholders. WM shareholders
may be surprised by the deal announcement; we see real synergies
with the SRCL RWCS (Regulated Medical Waste Disposal Solution)
business, but are less clear on Shred-It's fit with the existing
portfolio

 (Reporting by Kannaki Deka)
 ((kannaki.deka@thomsonreuters.com))