Waste Management Inc. (NYSE: WMI) is the biggie in the trash business. But, things may get tougher.
According to a report in the Wall Street Journal [a paid publication], Allied Waste Industries Inc. (NYSE: AW) and Republic Services Inc. (NYSE: RSG) are contemplating a $6.5 billion merger (a stock-for-stock swap). The companies are the second and third largest trash haulers in the U.S., respectively.
Yes, it's not a sexy industry, but it's fairly recession-resistant. There are some pressures, though, such as higher energy prices. But, the industry has been increasing prices to accommodate for this.
And, of course, if Allied and Republic combine operations, that should mean even more pricing power. Actually, the total revenues would be about $9.3 billion or so.
Besides, Allied could use some help. The company's revenues have languished and the debt load is a hefty $6.7 billion.
In Friday's trading, Allied shares were up 7.7% go $15, as investors speculated on a possible deal.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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