Waste Management Under Pressure to Raise its Bid for Republic

Date: August 5, 2008

Source: News Room

Last week, Bill Gates' investment arm BGI, which manages the assets of Cascade Investment, owner of 15.6% of Republic Services, sent a letter to Waste Management saying it should abandon efforts to acquire Republic as "ill-timed and poorly conceived." BGI which also owns 2.3% of Waste Management could well be pushing the company to sweeten its bid. It is becoming increasingly apparent that Waste Management will have to raise its bid by at least $5 per share to be taken seriously by the board or the company's larger shareholders i.e. BGI. A higher bid will be needed to surmount moves last week by Republic's board that adopted a "poison pill" defense that penalizes anyone acquiring more than 10% of the common stock without board approval. Of concern to Waste Management would be to lose its investment grade credit rating were it to offer all cash for Republic, which means the company would likely borrow. Here too it would likely raise debt rather than equity to avoid earnings dilution.

The action by BGI follows efforts by fellow multibillionaire and activist investor Carl Icahn to influence a six-month takeover battle between Yahoo Inc and Microsoft.

For more on the saga as it has unfolded, see:

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