10:34 AM EDT, 06/03/2024 (MT Newswires) -- Waste Management (WM) agreed to acquire medical waste disposal company Stericycle ( SRCL ) in a deal worth roughly $7.2 billion, including $1.4 billion of debt.

Investors of Stericycle ( SRCL ) will receive $62 per share in cash, the companies said in a joint statement on Monday. The price reflects a 24% premium to Stericycle's ( SRCL ) 60-day volume weighted average price as of May 23, the last trading day before media speculation surfaced about the firm exploring a sale.

The transaction, which requires clearance from regulators and approval from a majority of Stericycle's ( SRCL ) shareholders, is expected to complete as early as the fourth quarter, the companies said. Shares of Stericycle ( SRCL ) jumped 15% in Monday's trading session, while Waste Management's declined 2.6%.

The acquisition adds a platform in the medical waste and secure information destruction industries to Waste Management's environmental solutions. Waste Management said the business is expected to deliver revenue gains above "the strong fundamentals of its core solid waste business."

"We have a proven track record of integrating and optimizing acquired businesses that benefit our customers and employees and deliver a strong return on investment for our shareholders," Waste Management Chief Executive Jim Fish said in the statement. "We look forward to working with the Stericycle ( SRCL ) team to capture the strategic, customer service, environmental and financial benefits of this acquisition."

Waste Management aims to finance the deal through a combination of bank debt and senior notes. The firm projects the transaction to be accretive to its earnings and cash flows within the first year of completion. It estimates the deal to generate more than $125 million in annual run-rate synergies.

The deal "creates significant value for shareholders" and "unlocks new opportunities to deliver diversified services to customers," Stericycle ( SRCL ) CEO Cindy Miller said. "Stericycle's ( SRCL ) knowledge and expertise in regulated medical waste and secure information destruction are compelling additions to WM's broad portfolio of environmental solutions."

In April, Stericycle ( SRCL ) reported first-quarter adjusted earnings of $0.57 per share, up from $0.49 the year before. Revenue declined 2.8% to $664.9 million.

Price: 206.29, Change: -4.44, Percent Change: -2.11