Brooke Sutherland, Columnist

Garbage Merger Braves Messy Market

Lower taxes and a bigger footprint justify the merger between Waste Connections and Progressive Waste.

January 19, 2016 at 5:15 PM UTC

Brooke Sutherland is Bloomberg News' Boston bureau chief and writes the Industrial Strength Newsletter. She was previously a Bloomberg Opinion columnist covering deals and industrial companies and an M&A reporter for Bloomberg News.

Provide news feedback or report an error

Site feedback:

Take our Survey

This article is for subscribers only.

Leave it to a couple of garbage collectors to shrug off a little mess in the equity markets.

Waste Connections, a Texas-based trash processor, announced on Tuesday that it's merging with Canada's Progressive Waste Solutions in an all-stock transaction. It's a gutsy move considering that as of last week, the S&P 500 was off to its worst start on record and Waste Connections' own stock was down about 10 percent for the year. Among the larger deals announced so far in 2016, the vast majority have included at least some cash component.

It's gutsy, but not crazy. The trash collectors had reasons to stick with stock. For one, Waste Connections already has a decent-sized debt load and the industry hasn't been one to push the boundaries financially (as my colleague Gillian Tan has noted.) And because the transaction is structured as an inversion -- in which Waste Connections will move its headquarters to where Progressive Waste is based outside of Toronto -- adding cash isn't straightforward.