Environmental solutions provider WM (NYSE:WM), earlier known as Waste Management, could announce the acquisition of Stericycle (NASDAQ:SRCL), the Wall Street Journal reported. WM is expected to offer approximately $7 billion for SRCL, which specializes in the collection and disposal of regulated medical waste.
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Per the report, the deal is likely to be announced as soon as Monday, June 3. Moreover, the offer price includes SRCL’s debt.
Benefits of the Transaction
WM is one of the leading waste management companies in the U.S., providing collection, recycling, and disposal services. Additionally, it owns landfill facilities that produce landfill gas, which is used as renewable natural gas for electricity generation.
During the Q1 2024 conference call, WM’s leadership said that there are opportunities for the company to grow inorganically. It’s worth noting that WM focuses on acquisitions to pursue new initiatives and accelerate long-term growth. Further, it targets inorganic growth opportunities to improve its operations and cost structure.
The acquisition of Stericycle would strengthen Waste Management’s capabilities in the medical-waste-disposal segment. SRCL has a market cap of about $4.8 billion. It generated revenue of $2.7 billion in 2023.
Is WM Stock a Good Buy?
WM stock has gained over 29% in one year. Moreover, it is up about 18% year-to-date, driven by its resilient revenue, focus on lowering costs and driving profitability, consistent free cash flow generation, and strong balance sheet that supports its growth initiatives.
Wall Street is cautiously optimistic about WM stock. It has eight Buy and eight Hold recommendations for a Moderate Buy consensus rating. The analysts’ average price target for WM stock is $224.57, implying 6.57% upside potential from current levels.
