Analyst: A Republic-Progressive Merger Would Make Sense

It’s a merger that makes a lot of sense, says a long-time industry analyst, but officials from both Republic Services Inc. and Progressive Waste Solutions Ltd. expressed skepticism about the idea.

Michael  Hoffman, director of research for Wunderlich Securities, examined the possibility in an investor report. “A very natural strategic linkup would be these two businesses,” says Hoffman. “In particular, it would dramatically improve Republic’s Florida position and be an exceptional footprint in Canada if you got it at a reasonable price.”

Phoenix-based Republic ranks No. 2 on the Waste Age 100 with revenues of $8.1 billion. Progressive, headquartered in Toronto, is No. 7. The former BFI Canada operation bought IESI in 2005 and Waste Services in 2010.

“This duopoly would bring additional stability to pricing growth on local, regional and national levels,” Hoffman said in his report.

In an interview, Hoffman said getting bigger for big’s sake doesn’t make sense in the local and regional waste business. “You’ve got to look at how the assets are related, and does that make sense.”

Chaya Cooperberg, vice president, investor relations and corporate communications for Progressive Waste Solutions Ltd., said in an e-mail: “While we typically avoid commenting on rumors and speculation, I can tell you that Progressive Waste Solutions is not for sale. We believe that we can continue to create significant value for our shareholders through our growth strategies.” 

At Republic, “Officially, our position is that we don’t comment on rumors or speculation,” says Will Flower, senior vice president of communications. “Speculation has to be taken with a grain of salt. We do believe these stories are a reflection of the strength of the Republic brand.”

Hoffman says this kind of strategic thinking is what he has done is his 25 years in the industry. He made similar observations about both Republic and Allied and Progressive Waste and Waste Services before those mergers.