Stericycle Inc . (NASDAQ:SRCL), a leader in hazardous waste management, announced on Monday that it has become a wholly-owned indirect subsidiary of Waste Management (NYSE:WM), Inc., following a merger agreement that was concluded on the same day.
The deal, which was first announced on June 3, 2024, has led to the termination of Stericycle's credit agreement, the delisting of its common stock from the Nasdaq Global Select Market, and significant changes in its board of directors and executive officers.
As part of the acquisition, each share of Stericycle common stock has been converted into the right to receive $62.00 in cash, subject to standard tax withholdings. The total consideration paid by Waste Management to complete the merger, including the repayment of Stericycle's outstanding debt, is approximately $7.2 billion.
In connection with the merger, Stericycle's existing credit agreement, dated September 30, 2021, was terminated, and all outstanding obligations, totaling about $1.04 billion, were repaid. The related liens and security interests were also terminated, discharged, and released.
The merger has resulted in the delisting of Stericycle's shares from Nasdaq, with a notification on Form 25 to be filed with the SEC to report the delisting. Stericycle also plans to file a Form 15 with the SEC to request the termination of registration of its shares and the suspension of its reporting obligations.
This corporate reorganization has brought changes to Stericycle's leadership. At the closing of the merger, all members of Stericycle's board of directors ceased to be directors, and Rafael E. Carrasco and Courtney A. Tippy were appointed as new directors. Similarly, the officers of Stericycle were replaced by individuals appointed by Waste Management.
The transaction was structured as a merger with Stag Merger Sub Inc., a subsidiary of Waste Management, with Stericycle as the surviving corporation. This strategic move is expected to expand Waste Management's capabilities in the hazardous waste sector.
The information provided in this article is based on a press release statement and the relevant SEC filing by Stericycle Inc.
In other recent news, Stericycle received final regulatory approval for its merger with Waste Management, marking a significant step towards the completion of the transaction. The merger, initially announced in June 2024, is expected to consolidate Waste Management's position in the regulated waste and secure information destruction industries.
Despite a delay due to extended review by the Competition Bureau of Canada, both companies have expressed confidence in promptly addressing the bureau's inquiries.
Analyst firms such as BMO Capital Markets and Baird have maintained their ratings on Waste Management's stock, foreseeing a clear path to earnings growth in the coming years. Waste Management reported a 30% operating EBITDA margin and double-digit EBITDA growth, primarily due to effective pricing strategies and operational efficiencies.
Meanwhile, Stericycle reported an increase in adjusted earnings per share and adjusted EBITDA in Q1 2024, despite a decrease in revenue. The company also launched the Shred-it ProtectPLUS service, aimed at enhancing customer retention and cash flow.
These developments are closely monitored by investors as they could have significant implications for the company's future operations and financial performance.
InvestingPro Insights
The recent acquisition of Stericycle Inc. (NASDAQ:SRCL) by Waste Management aligns with several key financial indicators and trends observed in Stericycle's performance. According to InvestingPro data, Stericycle's market capitalization stood at $5.75 billion prior to the acquisition, with the deal valued at approximately $7.2 billion, suggesting a premium for shareholders.
InvestingPro Tips highlight that Stericycle was trading near its 52-week high and had experienced a large price uptick over the last six months, with a 34.21% price total return in that period. This upward trend likely reflected market anticipation of the acquisition.
The acquisition price of $62.00 per share closely matched the fair value of $62 USD based on analyst targets, as reported by InvestingPro. This alignment indicates that the deal was priced in line with market expectations.
It's worth noting that Stericycle's revenue growth had been slightly negative, with a -1.89% decline in the last twelve months. This context may have influenced the company's decision to merge with a larger entity like Waste Management, potentially seeking synergies and growth opportunities.
For investors interested in deeper analysis, InvestingPro offers 11 additional tips for Stericycle, providing a more comprehensive view of the company's financial health and market position prior to the acquisition.
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