THE WOODLANDS, Texas (AP) — Waste Connections is buying Progressive Waste Solutions Ltd. in an all-stock deal that creates a waste management company worth more than $8 billion.
The transaction is structured as a reverse merger. Shareholders of The Woodlands, Texas-based Waste Connections Inc. will own about 70 percent of the combined business, with Progressive Waste stockholders owning approximately 30 percent.
Progressive Waste announced earlier this month that it was looking at its strategic options. The Canadian company's chairman, James Forese, said in a written statement on Tuesday that the board and a special committee determined that the deal with Waste Connections was in the best interest of the company and enhances value for its shareholders.
The combined company will use the Waste Connections name and be led by Waste Connections' current management team. The board will include Waste Connections' five current directors and two members from Progressive Waste's current board. Once the deal closes, the business will be domiciled in Canada.
The buyout is expected to generate about $50 million in annual cost savings within the first year after closing.
Both companies' boards approved the transaction, which is targeted to close in the second quarter. It still needs approval from shareholders of both companies as well as U.S. antitrust approval and the approval of the Toronto Stock Exchange.
The combined company is expected to trade shares on the New York Stock Exchange and the Toronto Stock Exchange.
Shares of Waste Connections Inc. rose $2.60, or 5.1 percent, to $53.59 in midday trading. U.S. shares of Progressive Waste Solutions Ltd. gained $1.44, or 6.1 percent, to $24.95.