Amalgamation offer 'fair' to Waste Management

The proposed "merger" of Waste Management with Australian company Transpacific Industries is considered fair to Waste Management shareholders, an independent report said today.

Transpacific launched an $8.64-a-share, or $870 million, offer for Waste Management last month via an amalgamation proposal that fell under the Companies Act rather than the Takeovers Code.

If the bid succeeded, Waste Management would be incorporated into a Transpacific subsidiary and cease to exist.

Today, the Waste Management board released the results of an independent appraisal of the offer, prepared by Grant Samuel & Associates.

The appraisal assessed the full underlying value of Waste Management shares to be in the range of $7.24 to $8.21 a share.

That value was for 100 per cent of Waste Management and included a premium for control.

As the amalgamation payment of $8.64 per share was above Grant Samuel's value range, it was considered fair to Waste Management shareholders, the appraisal said.

The amalgamation payment with dividend of $8.80 was a premium of 25 per cent to the closing share price of $6.99 on March 24, the day before the proposed transaction was announced, the appraisal said.

It was also a premium of 32 per cent to the weighted average price of $6.66 in the month before the announcement.

It was reasonably uncommon for offer prices to exceed the assessed valuation range, the appraisal said.

In such instances the buyer was willing to share the perceived synergy benefits with the vendors for strategic reasons and more commonly to ensure the transaction went ahead. That would appear to be the case with the proposed transaction.

Waste Management chairman Jim Syme said the appraisal showed that the proposal was "excellent value".

The Waste Management board reaffirmed its unanimous recommendation that shareholders vote in favour of the proposed amalgamation.

Shareholders should receive a full copy of the independent appraisal report along with other information early next week, ahead of a shareholder meeting on May 17.

The Waste Management board also said it had decided the company would pay a fully imputed special dividend of 54 cents per share to shareholders before the effective date of the amalgamation.

The amount of the amalgamation payment would be reduced by the amount of that special dividend, which was being paid to ensure Waste Management shareholders received the benefit of all of the company's existing imputation credits.

The record date for the dividend was expected to be in early June, but if all necessary approvals for the amalgamation were not obtained, the special dividend would not be paid.

Waste Management shares were up 1c shortly after the appraisal announcement at $8.61

- NZPA