Stericycle: Waste Management to Acquire the Medical Waste Leader for $62 per Share

Following a May 24 Bloomberg News report that Stericycle was the target of takeover interest, (see our note "Stericycle: Reportedly Considering Sale Amid Takeover Interest; We Maintain Our $60 Fair Value Estimate"), Waste Management and Stericycle announced on June 3 that the two firms have entered into a definitive agreement in which WM will acquire Stericycle for $62 per share or an enterprise value of $7.2 billion. This valuation represents an enterprise value/adjusted 2024 EBITDA multiple of about 15. In our view, this is a favorable development for Stericycle shareholders as the acquisition price is above our preannouncement $60 fair value estimate and approximately 38% above Stericycle’s stock price on May 23 (before the takeover report). Considering WM’s limited position in the medical waste segment, we don’t anticipate antitrust roadblocks, nor do we expect competing bids. WM expects the deal to close as soon as the fourth quarter of 2024. We’ve raised our fair value estimate to $62 per share.