Republic to buy Allied in $6 billion waste deal

By Scott Malone and Jessica Hall

BOSTON/PHILADELPHIA (Reuters) - Republic Services Inc (RSG.N: Quote, Profile, Research, Stock Buzz) reached a $6 billion takeover deal for rival U.S. trash hauler Allied Waste Industries Inc (AW.N: Quote, Profile, Research, Stock Buzz) on Monday, solidifying the company's No. 2 position in its industry and giving it more power to push through price increases.

The all-stock deal for No. 3 Allied would create a company with $9 billion in annual revenue, trailing only Waste Management Inc (WMI.N: Quote, Profile, Research, Stock Buzz), whose 2007 revenue totaled $13.3 billion. Its next largest rival would be Waste Connections Inc (WCN.N: Quote, Profile, Research, Stock Buzz), which generated revenue of $958.5 million last year.

Based on Friday's closing prices, the deal would value Allied at about $14.04 a share, a 3.5 percent premium.

Under the deal, which has been under discussion for more than two years, Allied shareholders would receive 0.45 share of Republic common stock for each Allied share.

Republic would issue about 198 million shares to Allied shareholders, representing about 52 percent ownership of the combined company.

The premium is 17 percent over the average closing price of Allied stock for the 30 trading days before June 12, the companies said.

Republic and Allied shares, which have slid since the companies confirmed they were holding merger talks 10 days ago, were both lower on Monday.

The deal could almost quadruple, from 59 to 228, Republic's number of landfills for waste disposal.