Waste Connections, Progressive Merger

In special meetings held yesterday, shareholders of Toronto-based Progressive Waste Solutions and The Woodlands, Texas-based Waste Connections approved the previously announced plan of merger between the two firms. The deal is now expected to close on June 1. Under the plan, originally announced in January, Progressive Waste, Water Merger Sub LLC, a wholly-owned subsidiary of Progressive Waste, and Waste Connections, Inc., a Delaware corporation will merge with Waste Connections continuing as the surviving corporation. The deal is valued around $2.7 billion. The two companies posted more than $4 billion in revenues in 2015. They rank fifth and sixth on the current Waste360 Top 100. After the tie-up, the combined entity will rank third. A transaction resolution received support from approximately 99.47 percent of the votes cast at Progressive’s meeting. A similar one received more than 99 percent of votes cast at Waste Connection’s meeting. The combined company is made up of 273 collection operations, 132 transfer stations, 93 landfills, 71 recycling facilities in solid waste and 24 SWD wells and 20 E&P treatment facilities, according to Stifel Managing Director Michael E. Hoffman. Progressive shareholders also passed a resolution approving a consolidation of the outstanding Progressive shares on the basis of one Progressive share on a post-Consolidation basis for every 2.076843 Progressive Shares outstanding on a pre-Consolidation basis. This resolution also received support from 99.47 percent of the votes cast at Progressive’s meeting.. Upon completion of the merger, Waste Connections stockholders will receive 2.076843 Progressive shares for each share of Waste Connections common stock. Immediately after completion of the merger, every 2.076843 Progressive shares will be converted into one Progressive share. After the merger and consolidation, Waste Connections stockholders will receive one post-consolidation Progressive Share for each share of Waste Connections common stock held immediately prior to the merger. Upon completion of the merger, Waste Connections stockholders will own approximately 70 percent of the combined company and Progressive shareholders will own approximately 30 percent of the combined company. The combined company will use the Waste Connections name and its shares are expected to trade on the New York Stock Exchange and on the Toronto Stock Exchange under the symbol "WCN." Hoffman reiterated his “buy” rating on Waste Connections in a research note, writing “The initial SG&A synergy goal in the first twelve months is $50mm with some upside expected. There has been a general assumption and some discussion about operational synergies with a focus on safety, maintenance & repairs and labor and productivity. We believe these efforts could contribute up to $75mm over three years. In addition we look for the NewCo to drive more price leverage in the US operations from BIN.