Republic and Allied, Sitting In a Tree ...

This morning, Ft. Lauderdale, Fla.-based Republic Services announced that it has reached an agreement to buy Allied Waste for $6.07 billion in stock. Based in Phoenix, the combined company will retain the name Republic Services Inc. and will boast an annual revenue of more than $9 billion.

In reporting on the deal, the New York Times highlights the companies' claim that the deal would foster development of landfill gas-to-energy projects as "a pitch to energy-conscious investors."

But it may take more than landfill gas to win back hearts and minds on Wall Street, according to Carl Gutierrez of Forbes.com, who says the deal "is being received like yesterday's laundry." He notes that in early-morning trading, Allied's shares dropped 0.7 percent, or 10 cents, to $13.46, while shares of Republic dropped 0.9 percent, or 30 cents, to $30.87. Gutierrez attributes this lack of enthusiasm to investors' recollections of waste industry acquisitions in the past, such as USA Waste Services' purchase of Waste Management in 1998 and the acquisition of BFI Waste by Allied Waste in 1999.

Across the board, analysts agree that the combined company, if approved by federal regulators, will be well positioned to compete with the industry's 800-pound gorilla, Waste Management.

What do you think about the deal? Should we expect more consolidation in the industry in its wake? Register as a commenter and let your voice be heard!