Listen: Waste Management to buy Advanced Disposal for about $3 billion in cash
"Let's begin with some trash talk on Monday waste management announce that it's buying smaller rival advanced disposal services for around three billion dollars in cash. Now waste management is the country's largest provider of waste management or some of us say trash collection and guys you may not know this. But it's headquartered in the great city of where your hometown MAC? Houston, texas. Go stroz advanced disposal is the fourth largest solid waste company in the US. And on news of the deal. Guys. Shares advanced disposal up around eighteen percent right now waste management up around two percent. What do we think looks like a good deal to me? It's a small. It's a smaller companies certainly than waste management, but but not small as you said three billion dollar equity value. They'll take on almost two billion dollars of debt from the companies. So that makes it a total deal of four point nine billion. The company has around three million residential and industrial customers mostly in the eastern half of the US. It's it's a nice tuck and acquisition, obviously, they pay the a a decent premium for for the company to get it. But it doesn't appear to be an exorbitant price. I think they believe they'll be able to wring out about one hundred million dollars of expenses when the two companies combined. The dreaded words synergies was used twice in one sentence in the press release. You're not. We we try to says we shy away from that word around here, but hundred million dollars of expense of cost savings. Sounds good to me, and I I like to steal. It's a nice talking about these kinds of businesses. They have a lot of high fixed costs if you can acquire these companies that are reasonable prices. There's you you can get those costs of effectiveness, they're they're very sticky. I mean, like, you know, once you you kind of are part of a waste collection operation like that. That is the business that you are using them. Right. So just just some numbers. Right. So they paid for as Ron's head four point nine billion. They about three million customers that's about sixteen hundred per customer. So you think about how much you spend, you know, for your your trash hauling waste collection. Business are actually hoping and expecting those customers to be around for many many years, and they will be so for company waste minute management is at forty three billion dollar company. And you know, it's a pen five billion for this. They're taking on. Guess I got some debt for this. Because they don't have a lot of cash on the balance sheet waste management Dylan that does not have much cash. So they're going to continue to kind of run a levered balance sheet and get the cash flows from and be able to pay down the debt. So a pretty good deal. I think"