Republic's stock drop attracting investors: report

NEW YORK (Reuters) - Although shares of waste hauler Republic Services Inc (RSG.N) have fallen 39 percent in the past year as investors worry about its merger with Allied Waste Industries, shares are attractive to buyers such as Bill Gates, according to the April 6 edition of Barron's.

Microsoft founder Gates has been a Republic investor for years, and his investment vehicle, Cascade Investment, has raised it stake to nearly 15 percent in the past few months, Barron's said.

The market values Republic at 13 times analysts' 2009 earnings estimates of $1.34 a share, down from $1.73 a share, excluding items in 2008, Barron's said.

Republic bought Allied in a $6 billion stock swap, after fending off an unsolicited takeover by No. 1 U.S. hauler Waste Management Inc WMI.N, Barron's said. The deal closed on December 5.

Republic's management expects a 4 percent price increase to partially offset and 8 percent drop in volume this year, Barron's said. It could generate $2 a share of free cash, according to Raymond James analyst estimates, Barron's said. The company is using its cash to pay down some of its $7.5 billion in debt, Barron's said.

Republic shares closed at $18.18 on Friday. The company traded at $36.52 in September, its high for the past 12 months, and as low $15.05 last month.

(Reporting by Ilaina Jonas, editing by Maureen Bavdek)