Waste Management buys Stericycle for $7.2 billion

Waste Management buys Stericycle: ©Tada Images - stock.adobe.com

Waste Management Inc. and Stericycle announced that they have entered into a definitive agreement under which WM will acquire all outstanding shares of Stericycle for approximately $7.2 billion.

Stericycle is a provider of regulated medical waste and compliance services as well as secure information destruction services.

“At WM, we are committed to maximizing value for all our stakeholders by providing a comprehensive suite of environmental solutions to the market. The acquisition of Stericycle is a significant step in advancing this commitment because it broadens the scope of our service offerings, bringing together the leader in solid waste and a premier company in regulated medical waste services,” said Jim Fish, president and CEO of WM, in a statement.

“Our sustained focus and commitment to transforming our business over the past five years has uniquely positioned Stericycle for this transaction, which creates significant value for shareholders, unlocks new opportunities to deliver diversified services to customers, and supports investment in the growth and development of our team members,” said Cindy J. Miller, Stericycle’s president and CEO, in a statement. “As customers seek to manage a greater volume and variety of materials in a safe, responsible, and sustainable way, Stericycle’s knowledge and expertise in regulated medical waste and secure information destruction are compelling additions to WM’s broad portfolio of environmental solutions.”

Specifically, WM says it expects the addition of Stericycle to:

• Expand WM’s already extensive environmental service offerings. The acquisition of Stericycle adds a leading platform of differentiated assets in the attractive medical waste and secure information destruction industries to WM’s suite of environmental solutions. Given the growth outlook for health care services in North America, WM expects this business to deliver revenue growth that surpasses the strong fundamentals of its core solid waste business.
• Continue its commitment to comprehensive, sustainable waste solutions. This acquisition allows WM to further its unparalleled investment in growing North America’s recycling infrastructure and enhance the environmental value of Stericycle’s secure information destruction business.
• Strengthen the foundation for sustainable long-term growth as a comprehensive service provider. The acquisition will bring together talented and dedicated employees who are passionate about managing the environmental needs of customers and communities with outstanding service and a commitment to safety. Integrating Stericycle into WM adds a top-tier operator in the health care and secure information destruction sectors – providing customers the option of partnering with a single, trusted provider known for safety, compliance and environmental stewardship to solve their diverse waste management needs.
• Create significant synergies and grow WM’s earnings and cash flows. WM expects the transaction to generate more than $125 million in annual run-rate synergies. These synergy opportunities are driven by WM’s logistics expertise, its track record of using technology to optimize operating and SG&A costs, and its industry-leading disposal asset network. The Stericycle acquisition is expected to be accretive to WM’s earnings and cash flows within one year of close.
• Support WM’s capital allocation priorities. WM’s strong balance sheet and significant cash flow generation position it well to fund the acquisition. In 2024, WM’s operating cash flow will continue to be directed to organic growth investments in WM’s recycling and renewable energy businesses, capital expenditures to support its base business, dividend payments, and acquisitions. The Stericycle acquisition will enhance WM’s cash flow growth and support its commitment to grow shareholder returns. WM currently expects to achieve targeted leverage and return to normal run-rate share repurchases within 18 months of the acquisition’s close.

The transaction, which was unanimously approved by the boards of directors of both companies, is expected to close as early as the fourth quarter of 2024, subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by a majority of the holders of Stericycle’s outstanding common shares.