By NZPA
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Monday 27th March 2006 |
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The proposed merger - effectively a takeover in disguise - would see Waste Management absorbed into Transpacific's New Zealand subsidiary to create Australasia's largest waste management business.
Waste Management shareholders would receive an "amalgamation payment" of $8.64 per share - the agreed price of $8.80 minus a recent dividend of 15.8c per share.
That represented a 33% premium to the volume weighted average price of Waste Management on the NZX in the month to March 24.
The deal, which has the unanimous support of the Waste Management board, was subject to shareholder and regulatory approval.
Shares in Waste Management immediately leapt almost 25% to $8.70 on news of the merger, which valued the company at just under $900 million.
The shares have ranged between $5.60 and $7.20 over the past 12 months.
Transpacific, the lead player in Australia's liquid and hazardous waste sector, has a market capitalisation of $A1.2 billion ($NZ1.41 billion).
Waste Management - whose Australian operations are based in Adelaide, Brisbane and Melbourne - has been looking to expand its presence across the Tasman for some time, last year indicating it was interested in buying the Cleanaway business from Anglo-Australian group Brambles.
Transpacific said it remained committed to that purchase.
The deal was expected to result in $30 million in synergy benefits, while earnings per share were forecast to increase by 20% in 2007.
The merger price was a 30% premium to the average broker valuation for Waste Management.
Waste Management said it would be "business as usual" ahead of a vote on the merger.
Merger documentation, including an independent report, was expected to be despatched to shareholders in early May, with a shareholders' meeting expected to be held in mid May.
If approved, the merger was expected to be completed by June.
Waste Management chief executive Kim Ellis would remain at the helm of the merged company's solid waste operations following the deal.
"Transpacific Industries recognises the capability of management and staff within the Waste Management business," executive chairman Terry Peabody said.
Waste Management said it had undertaken a "rigorous review" of the proposal and believed it was a "very attractive" opportunity for shareholders.
"The proposal provides shareholders with a payment which represents a significant premium to the Waste Management share price," chairman Jim Syme said.
Peabody said the company chose a merger, rather than a takeover structure, to provide a more certain time frame.
Takeovers, as seen in the recent acquisition of forest products company Carter Holt Harvey by billionaire Graeme Hart which began in August last year and closed last week, can be a drawn-out process.
Goldman Sachs JBWere is acting as financial adviser and Bell Gully as legal advisers to Waste Management for the merger.
Transpacific is Australia's largest provider of industrial services and total waste management solutions, with a focus on liquid and hazardous waste. It also has a complementary commercial vehicle importation and distribution business.
The company, which has 2300 employees, listed on the Australian Stock Exchange in May last year. It is majority-owned by company founders, the Peabody family.
In 2005, Transpacific Industries had revenue of $A483 million and earnings before interest, tax, depreciation and amortisation (ebitda) of $A70.9 million.
Analysts polled by Reuters expected the company to record full year revenue of $A647 million in 2006 and ebitda of $A13 million.
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