Stericycle (NASDAQ:SRCL) shares jumped over 15% intra-day today following news of an acquisition agreement with Waste Management (NYSE:WM) valued at approximately $7.2 billion.
According to the deal, Waste Management will acquire all outstanding Stericycle shares at $62 each in cash, which includes Stericycle’s net debt of around $1.4 billion.
Oppenheimer analysts noted that while healthcare services constituted only 5% of Waste Management’s 2018 customer base, the company has minimal involvement in regulated medical waste services. They added that Stericycle’s market leadership, 90% retention rate, growth potential, and logistical and disposal assets could become more attractive to Waste Management following Stericycle’s recent business improvements.
BMO Capital Markets analysts remarked that acquiring Stericycle would enhance Waste Management’s solid waste and environmental service offerings. They observed that while the acquisition premium seems reasonable, the synergy target might be somewhat ambitious given the limited operational overlap between the two companies.