As filed with the Securities and Exchange Commission on August 1, 2008

Registration No. 333-[            ]

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form S-4

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

Republic Services, Inc.

(Exact name of registrant as specified in its charter)

 

110 S.E. 6^thStreet, 28^th Floor

Fort Lauderdale, Florida 33301

(954) 769-2400

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

David A. Barclay, Esq.

Senior Vice President, General Counsel

and Assistant Secretary

Republic Services, Inc.

110 S.E. 6^th Street, 28^th Floor

Fort Lauderdale, Florida 33301

(954) 769-2400

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

 

Copies to:

 

 

Approximate date of commencement of proposed sale to the public:   As soon as practicable after the effective time of this registration statement and the effective time of the merger of RS Merger Wedge, Inc., a Delaware corporation and a wholly owned subsidiary of Republic Services, Inc., with and into Allied Waste Industries, Inc., a Delaware corporation, as described in the Agreement and Plan of Merger, dated as of June 22, 2008, as amended, attached as Annex A to the joint proxy statement/prospectus forming part of this registration statement.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

 

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

CALCULATION OF REGISTRATION FEE

 

 

 

 

 

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

SUBJECT TO COMPLETION, DATED AUGUST 1, 2008

 

 

MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT

 

The boards of directors of Republic Services, Inc. and Allied Waste Industries, Inc. have each approved a merger agreement which provides for the combination of the two companies. The boards of directors of Republic and Allied believe that the combination of the two companies will be able to create substantially more long-term stockholder value than either company could individually achieve. Following the completion of the merger, Allied will be a wholly owned subsidiary of Republic with Allied stockholders receiving approximately 51.7% of the outstanding common stock of the combined company in respect of their Allied shares and Republic stockholders retaining approximately 48.3% of the outstanding common stock of the combined company, in each case, on a diluted basis. In this joint proxy statement/prospectus, Republic Services, Inc. is referred to as “Republic” and Allied Waste Industries, Inc. is referred to as “Allied.”

 

The combined company will be named Republic Services, Inc. and the shares of the combined company will be traded on the New York Stock Exchange, or the NYSE, under the symbol “RSG.”

 

If the merger is completed, Allied stockholders will be entitled to receive .45 shares of Republic common stock, par value $.01 per share, for each share of Allied common stock that they owned immediately before the effective time of the merger. Allied stockholders will be entitled to receive cash for any fractional shares that they would otherwise have received pursuant to the merger. Republic stockholders will continue to own their existing shares after the merger. Republic common stock is traded on the NYSE under the symbol “RSG.” On [          ], 2008, the closing price per share of Republic common stock as reported by the NYSE was $[     ]. You are urged to obtain current market quotations for the shares of Republic and Allied.

 

Republic and Allied estimate that Republic will issue approximately 195.5 million shares of Republic common stock pursuant to the merger based on the number of shares of Allied common stock outstanding on March 31, 2008, and will reserve an additional 15.2 million shares of Republic common stock for issuance in connection with the exercise or conversion of Allied’s outstanding options, other equity-based awards and convertible debentures.

 

YOUR VOTE IS IMPORTANT. The merger cannot be completed unless holders of Republic common stock vote to approve the issuance of Republic common stock and other securities convertible into or exercisable for shares of Republic common stock, which we refer to as the Republic share issuance, in connection with the merger and holders of Allied common stock vote to adopt the merger agreement, as amended on July 31, 2008, which is referred to as the merger agreement.

 

The Republic board of directors unanimously recommends that Republic stockholders vote “FOR” the Republic share issuance in connection with the merger. The Allied board of directors unanimously recommends that Allied stockholders vote “FOR” the adoption of the merger agreement.

 

Republic and Allied will each hold a special meeting of their respective stockholders to vote on these proposals. Whether or not you plan to attend your company’s special meeting, please take the time to cause your shares to be voted by completing and mailing the enclosed proxy card or submitting your proxy by telephone or through the Internet, using the procedures in the proxy voting instructions included with your proxy card. Even if you return the proxy, you may attend the special meeting and vote your shares in person at the meeting.

 

This document describes the proposed merger and related transactions in more detail. Republic and Allied encourage you to read this entire document carefully, including the merger agreement, as amended, which is included as Annex A, and the section discussing “Risk Factors” relating to the merger and the combined company beginning on page 30.

 

Republic and Allied look forward to the successful combination of the two companies.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the merger described in this joint proxy statement/prospectus or the Republic common stock to be issued pursuant to the merger, or determined if this joint proxy statement/prospectus is accurate or adequate. Any representation to the contrary is a criminal offense.

 

This joint proxy statement/prospectus is dated [          ], 2008 and, together with the accompanying proxy card, is first being mailed or otherwise delivered to stockholders of Republic and Allied on or about [          ], 2008.

 

THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES ADDITIONAL INFORMATION

 

This document incorporates by reference important business and financial information about Republic and Allied from other documents filed with the Securities and Exchange Commission, which is referred to as the SEC, that are not included in or delivered with this joint proxy statement/prospectus. This information is available to you without charge upon your written or oral request. For a list of the documents incorporated by reference into this joint proxy statement/prospectus, see “Where You Can Find More Information” beginning on page 150. You can obtain electronic or hardcopy versions of the documents that are incorporated by reference into this joint proxy statement/prospectus, without charge, from the Investor Relations section of the appropriate company’s website or by requesting them in writing or by telephone, in each case as set forth below:

 

 

IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY [          ], 2008 IN ORDER TO RECEIVE THEM BEFORE YOUR COMPANY’S SPECIAL MEETING.

 

SUBMITTING A PROXY ELECTRONICALLY, BY TELEPHONE OR BY MAIL

 

Republic stockholders of record on [          ], 2008 may submit their proxies:

 

 

Allied stockholders of record on [          ], 2008 may submit their proxies:

 

 

If you are a beneficial owner, please refer to your proxy card or the information forwarded by your bank, broker or other holder of record to see which options are available to you.

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held On [          ], 2008

 

Dear Republic Stockholder:

 

Republic Services, Inc. is pleased to invite you to attend a special meeting of the stockholders of Republic, which will be held on [          ], 2008 at [     ] a.m., Eastern time, at [     ].

 

The purpose of the Republic special meeting is to consider and to vote upon the following proposals:

 

 

The Republic board of directors has unanimously determined that the Republic share issuance in connection with the merger is advisable and in the best interests of Republic and its stockholders and recommends that Republic stockholders vote “FOR” the Republic share issuance in connection with the merger and “FOR” the adjournment of the Republic special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.

 

Republic and Allied cannot complete the merger unless the Republic share issuance in connection with the merger is approved:

 

(1) under the rules of the New York Stock Exchange, which requires the affirmative vote of holders of shares of Republic common stock representing a majority of votes cast on the proposal, provided that the total number of votes cast on the proposal represents a majority of the total number of shares of Republic common stock issued and outstanding on the record date for the Republic special meeting; and

 

(2) under the Republic bylaws, which requires the affirmative vote of holders of shares of Republic common stock representing a majority of the total number of shares of Republic common stock present, in person or by proxy at the special meeting, and entitled to vote on the proposal.

 

Your vote is very important. Your failure to vote will make it more difficult to approve the Republic share issuance.

 

The close of business on [          ], 2008 has been fixed as the record date, which is referred to as the Republic record date. Only holders of record of Republic common stock on the Republic record date are entitled to notice of, and to vote at, the Republic special meeting or any adjournments or postponements of the Republic special meeting. A list of the holders of Republic common stock entitled to vote at the Republic special meeting will be available for examination by any Republic stockholder, for any purpose germane to the Republic special meeting, at Republic’s principal executive offices at 110 S.E. 6th Street, 28th Floor, Fort Lauderdale, Florida 33301, for ten days before the Republic special meeting, during normal business hours, and at the time and place of the Republic special meeting as required by law.

 

Republic directs your attention to the joint proxy statement/prospectus accompanying this notice for a more complete statement regarding the matters proposed to be acted upon at the Republic special meeting. You are encouraged to read the entire joint proxy statement/prospectus carefully, including the merger agreement, as amended, which is included as Annex A to the joint proxy statement/prospectus, and the section discussing “Risk Factors” beginning on page 30.

 

SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE REPUBLIC SPECIAL MEETING, PLEASE SUBMIT A PROXY AS SOON AS POSSIBLE BY MAIL, BY TELEPHONE OR THROUGH THE INTERNET. INSTRUCTIONS ON THESE DIFFERENT WAYS TO SUBMIT YOUR PROXY ARE FOUND ON THE ENCLOSED PROXY FORM. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE REPUBLIC SPECIAL MEETING. REMEMBER, YOUR VOTE IS IMPORTANT, SO PLEASE ACT TODAY!

 

By Order of the Board of Directors,

 

 

James E. O’Connor

Chairman of the Board of Directors and Chief

Executive Officer

 

[          ], 2008

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

 

To Be Held On [          ], 2008

 

Dear Allied Stockholder:

 

Allied Waste Industries, Inc. is pleased to invite you to attend a special meeting of the stockholders of Allied which will be held on [          ], 2008 at [           a.m., Mountain time, at           ].

 

The purpose of the Allied special meeting is to consider and to vote upon the following proposals:

 

 

The Allied board of directors has unanimously determined that the merger agreement and the transactions contemplated by it, including the merger, are advisable and in the best interests of Allied and its stockholders and recommends that Allied stockholders vote “FOR” the adoption of the merger agreement and “FOR” the adjournment of the Allied special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.

 

Republic and Allied cannot complete the merger unless the proposal to adopt the merger agreement is approved by holders of a majority of the total number of shares of Allied common stock issued and outstanding on the record date for the Allied special meeting.

 

Your vote is very important. Your failure to vote will have the same effect as a vote against the adoption of the merger agreement.

 

The close of business on [          ], 2008 has been fixed as the record date, which is referred to as the Allied record date. Only holders of record of Allied common stock on the Allied record date are entitled to notice of, and to vote at, the Allied special meeting or any adjournments or postponements of the Allied special meeting. A list of holders of Allied common stock entitled to vote at the Allied special meeting will be available for examination by any Allied stockholder for any purpose germane to the Allied special meeting, at Allied’s principal executive offices at 18500 North Allied Way, Phoenix, Arizona 85054, for ten days before the Allied special meeting, during normal business hours, and at the time and place of the Allied special meeting as required by law.

 

Allied directs your attention to the joint proxy statement/prospectus accompanying this notice for more detailed information regarding the matters proposed to be acted upon at the Allied special meeting. You are encouraged to read the entire joint proxy statement/prospectus carefully, including the merger agreement, as amended, which is included as Annex A to the joint proxy statement/prospectus, and the section discussing “Risk Factors” beginning on page 30.

 

SO THAT YOUR SHARES WILL BE REPRESENTED WHETHER OR NOT YOU ATTEND THE ALLIED SPECIAL MEETING, PLEASE SUBMIT A PROXY AS SOON AS POSSIBLE BY MAIL, BY TELEPHONE OR THROUGH THE INTERNET. INSTRUCTIONS ON THESE DIFFERENT WAYS TO SUBMIT YOUR PROXY ARE FOUND ON THE ENCLOSED PROXY FORM. YOU MAY REVOKE YOUR PROXY AT ANY TIME BEFORE IT IS VOTED AT THE ALLIED SPECIAL MEETING. REMEMBER, YOUR VOTE IS IMPORTANT, SO PLEASE ACT TODAY!

 

By Order of the Board of Directors,

 

John J. Zillmer

Chairman of the Board of Directors and Chief

Executive Officer

 

[          ], 2008

 

TABLE OF CONTENTS

 

 

 

 

 

 

SUMMARY

 

The Companies

 

The Merger

		Republic				Allied				Implied
		Common				Common				Value of Allied
		Stock				Stock				Common Stock
June 12, 2008		$	33.66			$	13.92			$	15.15
June 20, 2008		$	31.19			$	13.56			$	14.04
[      ], 2008		$				$				$

	•	“FOR” the Republic share issuance in connection with the merger; and
	•	“FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.

	•	“FOR” the adoption of the merger agreement; and
	•	“FOR” the adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.

	•	the Republic board of directors must have a “Continuing Republic Committee,” consisting solely of five Continuing Republic Directors, defined as directors who are either (1) members of the Republic board of directors prior to the effective time of the merger, determined by the Republic board of directors to be “independent” of Republic under the rules of the NYSE and designated by Republic to be members of the Republic board of directors as of the effective time of the merger, or (2) subsequently nominated or appointed to be a member of the Republic board of directors by the Continuing Republic Committee;
	•	the Republic board of directors must have a “Continuing Allied Committee,” consisting solely of five Continuing Allied Directors, defined as directors who are either (1) members of the Allied board of directors prior to the effective time of the merger, determined by the Allied board of directors to be “independent” of Allied and Republic under the rules of NYSE and designated by Allied to be members of the Republic board of directors as of the effective time of the merger, or (2) subsequently nominated or appointed to be a member of the Republic board of directors by the Continuing Allied Committee;
	•	the Republic board of directors must be comprised of eleven members, consisting of (1) the Chief Executive Officer of Republic, (2) five Continuing Allied Directors, and (3) five Continuing Republic Directors, provided that, notwithstanding the foregoing, after the Initial Continuation Period, the size of the Republic board of directors may be increased by the affirmative vote of a majority of the board of directors;
	•	at each meeting of the Republic stockholders during the Continuation Period at which directors are to be elected, (1) the Continuing Republic Committee shall have the exclusive authority on behalf of Republic to nominate as directors of the Republic board of directors, a number of persons for election equal to the number of Continuing Republic Directors to be elected at such meeting, and (2) the Continuing Allied Committee shall have the exclusive authority on behalf of Republic to nominate as directors of the Republic board of directors, a number of persons for election equal to the number of Continuing Allied Directors to be elected at such meeting; and

	•	all directors nominated or appointed by the Continuing Republic Committee or the Continuing Allied Committee, as the case may be, must be “independent” of Republic for purposes of the rules of the NYSE, as determined by a majority of the persons making the nomination or appointment.

	•	In addition, during the period commencing on the effective time of the merger and continuing until the close of business on the day immediately prior to the second annual meeting of Republic stockholders held after the effective time, referred to as the Initial Continuation Period, (1) if any Continuing Republic Director is removed from the Republic board of directors, becomes disqualified, resigns, retires, dies or otherwise cannot or will not continue to serve as a member of the Republic board of directors, such vacancy may only be filled by the Continuing Republic Committee, and (2) if any Continuing Allied Director is removed from the Republic board of directors, becomes disqualified, resigns, retires, dies or otherwise cannot or will not continue to serve as a member of the Republic board of directors, such vacancy may only be filled by the Continuing Allied Committee.

	•	during the Continuation Period, each committee of the Republic board of directors must be comprised of five members, consisting of three Continuing Republic Directors and two Continuing Allied Directors;
	•	the initial chairman of the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee of the Republic board of directors as of the effective time of the merger will be, in each case, the Continuing Republic Director who was the chairman of such committee immediately prior to the effective time of the merger; and
	•	each Continuing Republic Director and Continuing Allied Director serving on the Audit Committee, the Nominating and Corporate Governance Committee or the Compensation Committee of the Republic board of directors must qualify as “independent” under the rules of the NYSE and, as applicable, the rules of the SEC.

	•	receipt of the Republic stockholder approval and Allied stockholder approval, in each case in accordance with Delaware law;

	•	the expiration or termination of the waiting period (and any extension thereof) applicable to the merger under the HSR Act;
	•	the absence of any law, temporary restraining order or preliminary or permanent injunction or other order making the merger illegal or otherwise prohibiting the consummation of the merger (collectively, “restraints”);
	•	the approval for listing on the NYSE, subject to official notice of issuance, of the shares of Republic common stock issuable in connection with the merger; and
	•	the effectiveness of, and the absence of any stop order with respect to, the registration statement on Form S-4 of which this joint proxy statement/prospectus forms a part.

	•	(x) certain representations and warranties made by the other party or parties in the merger agreement regarding capitalization, authority, broker fees, the opinion of the financial advisor, takeover laws, rights plans, ownership of stock, interests in competitors, insurance and RS Merger Wedge Inc.’s operations, being true and correct in all material respects on the date of the merger agreement and as of the closing date (or, if applicable, an earlier specified date) and (y) the other representations and warranties made by the other party or parties in the merger agreement being true and correct (without giving effect to any materiality or material adverse effect qualifications and words of similar import) on the date of the merger agreement and as of the closing date (or, if applicable, an earlier specified date), except in each case where the failure of any such representations and warranties to be true and correct would not, individually or in the aggregate, have or reasonably be expected to have a material adverse effect on the party making the representation or warranty (and provided that two representations and warranties made by Allied in respect of its indebtedness must be true and correct on the closing date without any materiality qualification);
	•	the performance by the other party or parties in all material respects of the covenants required to be performed by it or them at or before the effective time of the merger;
	•	receipt by each of Republic and Allied of an officer’s certificate of the other party on the closing date stating that the closing conditions with respect to such other party’s representations and warranties and covenants have been satisfied; and
	•	receipt by each party of an opinion of its own counsel that the merger will qualify as a tax-free reorganization.

	•	receipt by Republic of written confirmation from the applicable credit ratings agency that, upon the consummation of the merger, the consolidated senior unsecured debt of Republic (including Allied or any Allied subsidiary to the extent an issuer under certain indentures, and after giving effect to any parent or other guarantees required by such agency) will be rated either (i) BBB- or better by Standard & Poor’s and Ba1 or better by Moody’s, or (ii) Baa3 or better by Moody’s and BB+ or better by Standard & Poor’s. Each of Republic and Allied has committed to use its best efforts to ensure that this closing condition is satisfied.

	•	the merger has not been completed on or before May 15, 2009 (the “outside date”), except that the right to terminate the merger agreement under this provision will not be available to any party whose breach or failure to fulfill any obligation of the merger agreement has been a principal cause of or resulted in the failure of the merger to occur on or before the outside date;
	•	any restraint having the effect of making the merger illegal or otherwise prohibiting the completion of the merger becomes final and nonappealable; provided, however that the party electing to terminate pursuant to this provision will have used its reasonable best efforts to oppose any such restraint or to have such restraint vacated or made inapplicable to the merger; or
	•	the Allied stockholders or Republic stockholders fail to give the necessary approvals at their special meetings or any adjournments or postponements thereof.

	•	prior to the Allied stockholder approval, the Allied board of directors changes its recommendation to the Allied stockholders that they adopt the merger agreement unless, within ten business days, Republic requires the Allied board of directors to nevertheless submit such adoption to the Allied stockholders for approval despite such change in recommendation;
	•	Allied has breached any of its representations or warranties or failed to perform in any material respect any of its covenants or agreements set forth in the merger agreement, and such breach or failure to perform (i) would prevent Allied from satisfying the closing conditions of the merger agreement relating to the accuracy of the representations and warranties and/or compliance with covenants, and (ii) cannot be cured by the outside date or, if capable of being cured by that date, is not cured within 30 calendar days’ written notice to Allied; or
	•	prior to the Republic stockholder approval, the Republic board of directors changes its recommendation to the Republic stockholders that they approve the Republic share issuance and, within ten business days, Allied does not require the Republic board of directors to nevertheless submit the Republic share issuance to the Republic stockholders for approval despite such change in recommendation.

	•	prior to the Republic stockholder approval, the Republic board of directors changes its recommendation to the Republic stockholders that they approve the Republic share issuance unless, within ten business days, Allied requires the Republic board of directors to nevertheless submit the Republic share issuance to the Republic stockholders for approval despite such change in recommendation;
	•	Republic has breached any of its representations or warranties or failed to perform in any material respect any of its covenants or agreements set forth in the merger agreement, and such breach or failure to perform (i) would prevent Republic from satisfying the closing conditions of the merger agreement relating to the accuracy of the representations and warranties and/or compliance with covenants, and (ii) cannot be cured by the outside date or, if capable of being cured by that date, is not cured within 30 calendar days’ written notice to Republic; or
	•	prior to the Allied stockholder approval, the Allied board of directors changes its recommendation to the Allied stockholders that they adopt the merger agreement and, within ten business days, Republic does not require the Allied board of directors to nevertheless submit such adoption to the Allied stockholders for approval despite such change in recommendation.

	•	if the merger agreement is terminated by Republic or Allied following the failure by Republic to obtain the Republic stockholder approval, and (1) prior to such termination, an acquisition proposal with respect to Republic has been publicly announced or made known to the Republic board of directors and (2) within 12 months of such termination, Republic enters into a binding agreement to effect an acquisition proposal or consummates an acquisition proposal; or
	•	if the merger agreement is terminated by Republic or Allied following a change in the Republic recommendation, but only if (1) Allied does not require the Republic board of directors to nevertheless submit the Republic share issuance to the Republic stockholders for approval despite such change in Republic recommendation or (2) Allied is otherwise entitled to the payment of a termination fee and expenses under the circumstances described in the immediately preceding clause.

	•	if the merger agreement is terminated by Republic or Allied following the failure by Allied to obtain the Allied stockholder approval, and (1) prior to such termination, an acquisition proposal with respect to Allied has been publicly announced or made known to the Allied board of directors and (2) within 12 months of such termination, Allied enters into a binding agreement to effect an acquisition proposal or consummates an acquisition proposal; or
	•	if the merger agreement is terminated by Republic or Allied following a change in the Allied recommendation, but only if (1) Republic does not require the Allied board of directors to nevertheless submit such adoption to the Allied stockholders for approval despite such change in Allied recommendation or (2) Republic is otherwise entitled to the payment of a termination fee and expenses under the circumstances described in the immediately preceding clause.

Name		Title
James E. O’Connor		Chief Executive Officer and Chairman of the Board
Donald W. Slager		Chief Operating Officer and President
Tod C. Holmes		Executive Vice President and Chief Financial Officer
Michael J. Cordesman		Executive Vice President
Timothy R. Donovan		Executive Vice President, General Counsel and Secretary

	•	approve the issuance of shares of Republic common stock and other securities in connection with the merger; and
	•	approve an adjournment of the special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.

	•	under the NYSE rules, the Republic share issuance requires the affirmative vote of holders of shares of Republic common stock representing a majority of votes cast on the proposal, provided that the total number of votes cast on the proposal represents a majority of the total number of shares of Republic common stock issued and outstanding on the record date for the Republic special meeting; and
	•	under the Republic bylaws, the Republic share issuance requires the affirmative vote of holders of shares of Republic common stock representing a majority of the total number of shares of Republic common stock present, in person or by proxy at the special meeting, and entitled to vote on the proposal.

 

	•	you can send a signed notice of revocation of proxy;
	•	you can grant a new, valid proxy bearing a later date;
	•	you can revoke the proxy in accordance with the telephone or Internet proxy submission procedures described in the proxy voting instructions attached to the proxy card; or
	•	if you are a holder of record, you can attend the Republic special meeting and vote in person, which will automatically cancel any proxy previously given, but your attendance alone will not revoke any proxy that you have previously given.

	•	adopt the merger agreement, pursuant to which Allied will become a wholly owned subsidiary of Republic; and
	•	approve an adjournment of the Allied special meeting, if necessary, to solicit additional proxies in favor of the foregoing proposal.

	•	the adoption of the merger agreement requires the affirmative vote of holders of shares of Allied common stock representing a majority of the total number of shares of Allied common stock issued and outstanding on the Allied record date; and
	•	the approval of an adjournment of the Allied special meeting, if necessary, to solicit additional proxies in favor of the adoption of the merger agreement, requires the affirmative vote of holders of shares of Allied common stock representing a majority of the total number of shares of Allied common stock present, in person or by proxy at the Allied special meeting, and entitled to vote on the proposal.

	•	you can send a signed notice of revocation of proxy;
	•	you can grant a new, valid proxy bearing a later date;
	•	you can revoke the proxy in accordance with the telephone or Internet proxy submission procedures described in the proxy voting instructions attached to the proxy card; or
	•	if you are a holder of record, you can attend the Allied special meeting and vote in person, which will automatically cancel any proxy previously given, but your attendance alone will not revoke any proxy that you have previously given.

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF REPUBLIC
(in millions, except per share data)

		Three Months
		Ended March 31,								Years Ended December 31,
		2008				2007(1)				2007(1)				2006				2005				2004				2003
Statement of Income Data:
Revenue		$	779.2			$	765.6			$	3,176.2			$	3,070.6			$	2,863.9			$	2,708.1			$	2,517.8
Expenses:
Cost of operations			476.5				488.4				1,997.3				1,924.4				1,803.9				1,714.4				1,605.4
Depreciation, amortization and depletion			73.4				79.0				305.5				296.0				278.8				259.4				239.1
Accretion			4.4				4.1				17.1				15.7				14.5				13.7				12.7
Selling, general and administrative			82.7				79.4				320.3				315.0				289.5				268.3				247.9
Operating income			142.2				114.7				536.0				519.5				477.2				452.3				412.7
Interest expense			(21.4	)			(24.0	)			(94.8	)			(95.8	)			(81.0	)			(76.7	)			(78.0	)
Interest income			2.8				3.3				12.8				15.8				11.4				6.9				9.5
Other income (expenses), net			.2				.4				14.1				4.2				1.6				1.2				3.2
Income before income taxes			123.8				94.4				468.1				443.7				409.2				383.7				347.4
Provision for income taxes			47.7				40.5				177.9				164.1				155.5				145.8				132.0
Income before cumulative effect of changes in accounting principles			76.1				53.9				290.2				279.6				253.7				237.9				215.4
Cumulative effect of changes in accounting principles			—				—				—				—				—				—				(37.8	)
Net income		$	76.1			$	53.9			$	290.2			$	279.6			$	253.7			$	237.9			$	177.6
Basic earnings per share:
Before cumulative effect of changes in accounting principles		$	.41			$	.28			$	1.53			$	1.41			$	1.23			$	1.10			$	.96
Cumulative effect of changes in accounting principles			—				—				—				—				—				—				(.17	)
Basic earnings per share		$	.41			$	.28			$	1.53			$	1.41			$	1.23			$	1.10			$	0.79
Weighted average common shares outstanding			183.4				193.7				190.1				198.2				207.0				217.3				224.8
Diluted earnings per share:
Before cumulative effect of changes in accounting principles		$	.41			$	.28			$	1.51			$	1.39			$	1.20			$	1.08			$	.95
Cumulative effect of changes in accounting principles			—				—				—				—				—				—				(.17	)

		Three Months
		Ended March 31,								Years Ended December 31,
		2008				2007(1)				2007(1)				2006				2005				2004				2003
Diluted earnings per share		$	.41			$	.28			$	1.51			$	1.39			$	1.20			$	1.08			$	.78
Weighted average common and common equivalent shares outstanding			185.1				195.6				192.0				200.6				210.8				221.1				227.6
Cash dividends per common share		$	.1700			$	.1067			$	.5534			$	.4000			$	.3466			$	.2400			$	.0800
Balance Sheet Data:
Cash and cash equivalents		$	50.4			$	20.3			$	21.8			$	29.1			$	131.8			$	141.5			$	119.2
Restricted cash and marketable securities			190.0				142.0				165.0				153.3				255.3				275.7				397.4
Total assets			4,534.4				4,410.6				4,467.8				4,429.4				4,550.5				4,464.6				4,554.1
Total debt			1,695.3				1,552.2				1,567.8				1,547.2				1,475.1				1,354.3				1,520.3
Total stockholders’ equity			1,264.0				1,400.6				1,303.8				1,422.1				1,605.8				1,872.5				1,904.5

(1)		During the three months ended March 31, 2007, Republic recorded a pre-tax charge of $22 million ($13.5 million, or $.07 per diluted share, net of tax) related to estimated costs believed required to comply with final findings and orders issued by the Ohio Environmental Protection Agency in response to environmental conditions at its Countywide Recycling and Disposal Facility in Ohio. During the three months ended September 30, 2007, Republic agreed to take certain additional remedial actions at Countywide and recorded an additional pre-tax charge of $23.3 million ($14.4 million, or $.08 per diluted share, net of tax).

 

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF ALLIED
(in millions, except per share data)

		Three Months Ended March 31,								Years Ended December 31,
		2008				2007				2007				2006				2005				2004				2003(5)
Statement of Operations Data(1):
Revenues		$	1,484.2			$	1,444.6			$	6,068.7			$	5,908.5			$	5,612.2			$	5,396.5			$	5,264.1
Cost of operations			948.1				922.8				3,787.1				3,786.4				3,654.6				3,428.8				3,235.8
Selling, general and administrative expenses			144.4				160.8				631.9				587.3				510.2				544.7				471.7
Depreciation and amortization			132.8				128.4				553.5				557.7				543.6				547.1				534.1
Loss (gain) from divestitures and asset impairments(2)			18.5				(0.9	)			40.5				22.5				—				—				—
Operating income			240.4				233.5				1,055.7				954.6				903.8				875.9				1,022.5
Interest expense and other(3)			109.7				171.1				538.4				563.4				583.1				752.5				826.1
Income from continuing operations before income taxes			130.7				62.4				517.3				391.2				320.7				123.4				196.4
Income tax expense			57.6				28.2				207.1				235.3				131.1				70.6				86.6
Minority interests			0.5				(0.1	)			0.4				0.1				(0.2	)			(2.7	)			1.9
Income from continuing operations		$	72.6			$	34.3			$	309.8			$	155.8			$	189.8			$	55.5			$	107.9
Basic earnings per share:
Continuing operations		$	0.17			$	0.07			$	0.74			$	0.32			$	0.42			$	0.11			$	(2.37	)
Weighted average common shares			390.6				367.7				368.8				356.7				326.9				315.0				203.8
Diluted earnings per share:
Continuing operations		$	0.17			$	0.07			$	0.71			$	0.32			$	0.42			$	0.11			$	(2.37	)
Weighted average common and common equivalent shares			444.2				370.4				443.0				359.3				330.1				319.7				203.8
Balance Sheet Data(1):
Cash and cash equivalents		$	44.5			$	49.8			$	230.9			$	94.1			$	56.1			$	68.0			$	444.7
Total assets			13,799.9				13,776.4				13,948.7				13,811.0				13,661.3				13,539.2				13,860.9
Total debt			6,674.5				7,006.1				6,642.9				6,910.6				7,091.7				7,757.0				8,234.1
Stockholders’ equity(4)			3,973.7				3,641.2				3,904.2				3,598.9				3,439.4				2,604.9				2,517.7

(1)		During 2007, 2004 and 2003, Allied sold or held for sale certain operations that met the criteria for reporting as discontinued operations. The selected financial data for all prior periods has been reclassified to exclude these operations from continuing operations.

(2)		Loss (gain) from divestitures and asset impairments includes asset sales completed as a result of Allied’s market rationalization focus and are not included in discontinued operations. The amount of $18.5 million for the three months ended March 31, 2008 includes an asset impairment charge of $17.8 million associated with a landfill in Allied’s Midwest region that until February 2007 was managed by a third party under a partnership agreement. The amount of $40.5 million for the year ended December 31, 2007 includes asset impairments of $27.1 million, of which $24.5 million related to the asset impairment charge for the Midwest region landfill mentioned previously. The amount of $22.5 million for the year ended December 31, 2006 includes $9.7 million of landfill asset impairments resulting from management’s decision to discontinue development and operations of the sites and a $5.2 million charge related to the relocation of Allied’s operations support center.
(3)		Includes costs incurred to extinguish debt for the years ended December 31, 2007, 2006, 2005, 2004 and 2003 of $59.6 million, $41.3 million, $62.6 million, $156.2 million and $108.1 million, respectively.
(4)		In 2006, Allied recorded an after-tax charge of $57.4 million to stockholders’ equity relating to the adoption of SFAS No. 158, Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106 and 132(R) (SFAS 158).
(5)		During December 2003, all of Allied’s Series A Preferred Stock was exchanged for 110.5 million shares of common stock. In connection with the exchange, Allied recorded a reduction to net income available to common shareholders of $496.6 million for the fair value of the incremental shares of common stock issued to the holders of the preferred stock over the amount the holders would have received under the original conversion provisions.

 

SELECTED UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL DATA

		For the Three Months				For the Year Ended
		Ended March 31, 2008				December 31, 2007
		(in millions,				(in millions,
		except per				except per
		share data)				share data)
STATEMENT OF INCOME FROM CONTINUING OPERATIONS DATA:
Revenue		$	2,263.4			$	9,244.9
Operating income			365.0				1,527.6
Income from continuing operations			138.8				571.0
Income from continuing operations available to common shareholders			132.6				533.5
Basic income from continuing operations available to common shareholders per share			.37				1.49
Diluted income from continuing operations available to common shareholders per share			.36				1.47
Cash dividends per common share			.17				.55

		As of March 31, 2008
		(in millions)
BALANCE SHEET DATA:
Cash and cash equivalents		$	26.9
Restricted cash (current and non-current)			253.0
Total assets			20,882.1
Total debt			8,372.9
Total stockholders’ equity			7,444.1

		As of and for the				For the
		Three Months Ended				Year Ended
		March 31, 2008				December 31, 2007
Republic Historical Per Share Data:
Income from continuing operations available to common shareholders —
Basic		$	.41			$	1.53
Diluted			.41				1.51
Cash dividends per common share			.17				.55
Book value per common share			6.92				N/A
Republic Unaudited Pro Forma Consolidated Per Share Data:
Income from continuing operations available to common shareholders —
Basic		$	.37			$	1.49
Diluted			.36				1.47
Cash dividends per common share			.17				.55
Book value per common share			19.68				N/A
Allied Historical Per Share Data:
Income from continuing operations available to common shareholders —
Basic		$	.17			$	.74
Diluted			.17				.71
Cash dividends per common share			—				—
Book value per common share			9.21				N/A
Allied Unaudited Equivalent Pro Forma Per Share Data:(1)
Income from continuing operations available to common shareholders —
Basic		$	.17			$	.67
Diluted			.16				.66
Cash dividends per common share			.08				.25
Book value per common share			8.86				N/A

(1)		The equivalent pro forma per share data for Allied was calculated by multiplying the Republic pro forma consolidated per share data above by the exchange ratio of .45. Under the terms of the Merger Agreement, Allied stockholders will receive .45 shares of Republic stock for each share of Allied common stock held at the effective time of the merger.

 

COMPARATIVE PER SHARE MARKET PRICE AND DIVIDEND INFORMATION

		Republic Common Stock												Allied Common Stock
		Market Price												Market Price
		High				Low				Dividends				High				Low				Dividends
2006
First Quarter		$	28.49			$	24.47			$	.0933			$	12.24			$	8.53			$	—
Second Quarter			29.47				25.75				.0933				14.26				10.66				—
Third Quarter			27.53				25.04				.1067				11.27				9.78				—
Fourth Quarter			28.83				26.57				.1067				13.50				11.19				—
2007
First Quarter			29.67				26.22				.1067				13.22				12.23				—
Second Quarter			31.09				27.05				.1067				14.00				12.41				—
Third Quarter			33.26				27.93				.1700				13.97				11.90				—
Fourth Quarter			35.00				30.90				.1700				13.15				10.75				—
2008
First Quarter			32.00				27.30				.1700				10.90				9.30				—
Second Quarter			34.44				29.09				.1700				15.00				11.12				—
Third Quarter (through July 28, 2008)			33.21				27.29				.1900				12.48				11.47				—

										Implied Value
		Republic				Allied				of Allied
		Common Stock				Common Stock				Common Stock
June 12, 2008		$	33.66			$	13.92			$	15.15
June 20, 2008			31.19				13.56				14.04
[      ], 2008

 

In addition to the other information included and incorporated by reference into this joint proxy statement/prospectus, including the matters addressed in “Cautionary Statement Regarding Forward-Looking Statements” below, you should carefully consider the following risk factors before deciding whether to vote for the Republic share issuance, in the case of Republic stockholders, or for adoption of the merger agreement, in the case of Allied stockholders. In addition to the risk factors set forth below, you should read and consider other risk factors specific to each of the Republic and Allied businesses that will also affect the combined company after the merger, which are described in Part I, Item 1A of each company’s Annual Report on Form 10-K for the year ended December 31, 2007, each of which has been filed by Republic or Allied, as applicable, with the SEC and all of which are incorporated by reference into this joint proxy statement/prospectus. If any of the risks described below or in the periodic reports incorporated by reference into this joint proxy statement/prospectus actually occurs, the businesses, financial condition, results of operations, prospects or stock prices of Republic, Allied or the combined company could be materially adversely affected. See “Where You Can Find More Information,” beginning on page 150.

 

The exchange ratio is fixed and will not be adjusted. The market price of shares of Republic common stock may fluctuate, and Allied stockholders cannot be sure of the market value of the shares of Republic common stock that will be issued pursuant to the merger.

 

Upon completion of the merger, each share of Allied common stock outstanding immediately prior to the merger will be converted into the right to receive .45 shares of Republic common stock, with cash being paid in lieu of any fractional shares. The exchange ratio is fixed at .45 shares of Republic common stock for each share of Allied common stock, and will not be adjusted to reflect any increases or decreases in the price of Republic common stock or Allied common stock. The value a stockholder receives pursuant to the merger in respect of the stockholder’s Allied common stock will depend upon the market price of a share of Republic common stock upon the completion of the merger. If the price of Republic common stock declines, Allied stockholders will receive less value for their shares upon completion of the merger than the value calculated pursuant to the exchange ratio on the date immediately prior to the date on which the parties confirmed that they were engaged in merger discussions, the date immediately prior to the date the merger agreement was signed or the date of the Allied special meeting.

 

Due to the regulatory approval process, the merger may not be completed until a significant period of time has passed after the Republic and Allied special meetings, during which time the market value of Republic common stock and Allied common stock may fluctuate. Therefore, at the time of their respective special meetings, Republic and Allied stockholders will not know the exact market value of Republic common stock that will be issued in connection with the merger. The market price of a share of Republic common stock at the time the merger is completed is likely to be different, and may be lower or higher, than it was at the time the parties confirmed that they were engaged in merger discussions, the time the merger agreement was executed or the time of the special meetings. The closing sale price of Republic common stock on the NYSE on June 12, 2008, the last trading day before the day on which Republic and Allied confirmed that they were involved in discussions regarding a possible business combination, was $33.66 per share. From June 13, 2008 through the date of this joint proxy statement/prospectus, the trading price of Republic common stock ranged from a high of $34.44 per share to a low of $27.29 per share. For Republic and Allied historical market prices, see “Comparative Per Share Market Price and Dividend Information” beginning on page 28.

 

Stock price changes may result from a variety of factors, including:

 

 

 

Republic and Allied stockholders are urged to obtain current market quotations for Republic and Allied common stock when they consider whether to approve the proposals required to complete the merger at the respective special meetings.

 

The fairness opinions obtained by Republic and Allied from their respective financial advisors will not reflect changes in circumstances between signing the merger agreement and the completion of the merger.

 

Neither Republic nor Allied has obtained an updated fairness opinion as of the date of this joint proxy statement/prospectus from Merrill Lynch, Republic’s financial advisor or UBS, Allied’s financial advisor. Changes in the operations and prospects of Republic or Allied, general market and economic conditions, and other factors that may be beyond the control of Republic and Allied, and on which the fairness opinions were based, may alter the value of Republic or Allied or the prices of shares of Allied common stock or Republic common stock by the time the merger is completed. The opinions do not speak as of the time the merger will be completed or as of any date other than the dates of such written opinions. Because neither Republic nor Allied anticipates asking its respective financial advisor to update its opinion, the written opinions dated June 22, 2008 do not address the fairness of the exchange ratio, from a financial point of view, at the time the merger is completed. The opinions are included as Annex C and D to this joint proxy statement/prospectus. For a description of the opinion that Republic received from its financial advisor and a summary of the material financial analyses provided to the Republic board of directors in connection with rendering such opinion, see “Opinion of Financial Advisor to the Republic Board of Directors” beginning on page 60. For a description of the opinion that Allied received from its financial advisor and a summary of the material financial analyses provided to the Allied board of directors in connection with rendering such opinion, see “Opinion of Financial Advisor to the Allied Board of Directors” beginning on page 72. For a description of the other factors considered by the Republic board of directors in determining to approve the merger, see “Republic Reasons for the Merger” beginning on page 56. For a description of the other factors considered by the Allied board of directors in determining to approve the merger, see “Allied Reasons for the Merger” beginning on page 68.

 

The merger is subject to the receipt of consents, approvals and non-objections from anti-trust regulators, which may impose conditions on, jeopardize or delay completion of the merger, result in additional expenditures of money and resources, reduce the anticipated benefits of the merger or cause the failure of the completion of the merger.

 

Completion of the merger is conditioned upon filings with, and the receipt of required consents, orders, approvals, non-objections or clearances from, the Antitrust Division of the U.S. Department of Justice under the HSR Act. Republic and Allied intend to pursue these consents, orders, approvals, non-objections and clearances in accordance with the merger agreement. There can be no assurance, however, that these consents,

orders, approvals, non-objections and clearances will be obtained or, if they are obtained, that they will not impose conditions on, or require divestitures relating to, the divisions, operations or assets of Republic or Allied. These conditions or divestitures may jeopardize or delay completion of the merger, result in additional expenditures of money and resources, or reduce the anticipated benefits of the merger. The merger agreement requires Republic and Allied to satisfy any conditions or divestiture requirements imposed upon them unless the conditions or divestitures individually or in the aggregate would reasonably be expected to have a material adverse effect after the effective time of the merger on the assets and liabilities, financial condition or business of Republic and its subsidiaries (including the combined company and its subsidiaries), taken as a whole, or the benefits expected to be derived by the parties on the date of the merger agreement from the combination of Republic and Allied via the merger (such combined business to be taken as a whole) in such a manner that such party would not have entered into the merger agreement in the face of such materially and adversely affected benefits. See “The Merger Agreement — Conditions to Completion of the Merger” beginning on page 111 for a discussion of the conditions to the completion of the merger and “Regulatory Matters” beginning on page 89 for a description of the regulatory approvals necessary in connection with the merger.

 

There can be no assurance that the merger will be consummated. The announcement and pendency of the merger, or the failure of the merger to be consummated, could have an adverse effect on Republic’s or Allied’s stock price, business, financial condition, results of operations or prospects.

 

The merger is subject to a number of conditions to closing, including (i) the approval of the issuance of shares of Republic common stock in accordance with the terms of the merger agreement, (ii) the adoption of the merger agreement by the Allied stockholders, (iii) the expiration or termination of the waiting period (and any extension thereof) or the resolution of any litigation instituted applicable to the merger under the HSR Act or any other applicable federal or state statue or regulation, (iv) no temporary restraining order, preliminary or permanent injunction or other order shall have been issued (and remain in effect) by a court or other governmental entity having the effect of making the merger illegal or otherwise prohibiting the consummation of the merger, (v) the approval for listing on the NYSE of the shares of Republic common stock issuable in connection with the merger, and (vi) receipt by Republic of written confirmation from the applicable credit ratings agencies of the senior unsecured debt rating of Republic (including certain subsidiaries of Allied who are issuers of debt and will become subsidiaries of Republic at the effective time) upon the consummation of the merger. See “The Merger Agreement — Conditions to Completion of the Merger,” beginning on page 111.

 

If the stockholders of Republic fail to approve the Republic share issuance or if Allied stockholders fail to adopt the merger agreement, Republic and Allied will not be able to complete the merger. Additionally, if the other closing conditions are not met or waived, the companies will not be able to complete the merger. In addition, on July 14, 2008, Waste Management, Inc. made an unsolicited proposal to acquire Republic. While Republic refused to enter into discussions with Waste because that proposal did not constitute a superior proposal, and could not reasonably be expected to lead to a superior proposal, there can be no assurance that Waste will not make a further proposal or that any such proposal will not result in the termination of the merger agreement. As a result, there can be no assurance that the merger will be completed in a timely manner or at all.

 

Further, the announcement and pendency of the merger could disrupt Republic’s and Allied’s businesses, in any of the following ways, among others:

 

 

 

Republic and Allied may face additional challenges in competing for new business and retaining or renewing business. These disruptions could be exacerbated by a delay in the completion of the merger or termination of the merger agreement.

 

For the foregoing reasons, there can be no assurance that the announcement and pendency of the merger, or the failure of the merger to be consummated, will not have an adverse effect on Republic’s or Allied’s stock price, business, financial condition, results of operations or prospectus.

 

There can be no assurance that the combined company will obtain investment grade credit ratings at the closing of the merger, which could impact the results of operations of the combined company after the merger.

 

Under the merger agreement, Republic is not required to consummate the merger unless, upon consummation of the merger, the senior unsecured debt rating of Republic (including certain subsidiaries of Allied who are issuers of debt and will become subsidiaries of Republic at the effective time) is at least investment grade from one of Standard & Poor’s and Moody’s (and no lower than one level below investment grade from the other rating agency). See “The Merger Agreement — Conditions to Completion of the Merger,” beginning on page 111. There can be no assurance that this condition to the closing of the merger will be satisfied. The parties anticipate that Republic’s senior unsecured debt rating upon consummation of the merger will be investment grade (although lower than Republic’s senior unsecured debt rating prior to announcement of the merger). Republic could, however, waive the condition to closing of the merger that Republic’s rating be at least investment grade from one of Standard & Poor’s and Moody’s (and no lower than one level below investment grade from the other rating agency). If Republic closes the merger without the investment grade credit ratings, then the combined company could have increased interest expenses and more burdensome covenants in its financing agreements. That could adversely impact the results of operations of the combined company.

 

There can be no assurance that Republic will be able to close the committed debt financing contemplated in connection with the merger on the terms expected by Republic.

 

Completion of the merger is not conditioned on receipt of any financing. Republic has agreed to use its best efforts to arrange financing sufficient to refinance or amend the terms of, approximately $[          ] billion of Allied’s existing indebtedness and approximately $[          ] billion of Republic’s existing indebtedness. Republic has obtained commitments for such arrangements, but there can be no assurance that Republic will be able to satisfy all the conditions necessary to close on or borrow funds under such arrangements. If such conditions are not satisfied, then alternative financing obtained in lieu of the financings contemplated by the existing commitments may have higher interest rates than Republic or Allied currently anticipate, which could increase the combined company’s interest expense, and may contain more burdensome covenants than Republic’s current debt instruments.

 

The merger agreement limits Republic’s and Allied’s ability to pursue an alternative acquisition proposal and requires Republic or Allied to pay a termination fee of $200 million, plus expenses, if it does.

 

The merger agreement prohibits Republic and Allied from soliciting, initiating or encouraging alternative merger or acquisition proposals with any third party. The merger agreement also provides for the payment by either of Republic or Allied to the other of a termination fee of $200 million, plus up to $50 million in expenses, if the merger agreement is terminated in certain circumstances in connection with a competing acquisition proposal for that company or the withdrawal by the board of directors of that company of its recommendation that the stockholders of that company vote in favor of the proposals required to consummate the merger, as the case may be. See “The Merger Agreement — Termination Fees,” beginning on page 113.

There may be a long delay between Republic and Allied each receiving the necessary stockholder approvals for the merger and the closing of the transaction, during which time both companies will lose the ability to consider and pursue alternative acquisition proposals, which might otherwise be superior to the merger.

 

Following their respective stockholder approvals, the merger agreement prohibits both Republic and Allied from taking any actions to review, consider or recommend any alternative acquisition proposals, including those that could be superior to Republic’s or Allied’s stockholders, respectively, when compared to the merger. Given the potentially long delay between stockholder approval and antitrust clearance, the time during which both companies could be prevented from reviewing, considering or recommending such proposals could be significant.

 

Certain directors and executive officers of Republic and Allied may have interests that may be different from, or in addition to, interests of Republic and Allied stockholders generally.

 

Some of the directors of Republic and Allied who recommend that Republic and Allied stockholders vote in favor of adopting the merger agreement, and the executive officers of Republic and Allied who provided information to the Republic and Allied board of directors relating to the merger, have employment, indemnification and severance benefit arrangements, rights to acceleration of equity-based awards and other benefits on a change in control of Republic and Allied, and rights to ongoing indemnification and insurance that may provide them with interests in the merger. The receipt of compensation or other benefits, including the rights to acceleration of equity-based awards by Republic’s or Allied’s executive officers in connection with the merger, may make it more difficult for the combined company to retain their services after the merger, or require the combined company to expend additional sums to continue to retain their services. Stockholders of both companies should be aware of these interests when considering the Republic and Allied board of directors’ recommendations that they vote in favor of the adoption of the merger agreement, or the Republic share issuance, as the case may be. See “The Merger — Interests of Republic Executive Officers and Directors in the Merger” beginning on page 66. See “The Merger — Interests of Allied Executive Officers and Directors in the Merger” beginning on page 78.

 

 

Republic and Allied may experience difficulties integrating their businesses.

 

Currently, each company operates as an independent public company. Achieving the anticipated benefits of the merger will depend in significant part upon whether the two companies integrate their businesses in an efficient and effective manner. Due to legal restrictions, Republic and Allied have been able to conduct only limited planning regarding the integration of the two companies following the merger and have not yet determined the exact nature of how the businesses and operations of the two companies will be combined after the merger. The actual integration may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. The companies may not be able to accomplish the integration process smoothly, successfully or on a timely basis. The necessity of coordinating geographically separated organizations, systems of controls, and facilities and addressing possible differences in business backgrounds, corporate cultures and management philosophies may increase the difficulties of integration. The companies operate numerous systems and controls, including those involving management information, purchasing, accounting and finance, sales, billing, employee benefits, payroll and regulatory compliance. The integration of operations following the merger will require the dedication of significant management and external resources, which may temporarily distract management’s attention from the day-to-day business of the combined company and be costly. Employee uncertainty and lack of focus during the integration process may also disrupt the business of the combined company. Any inability of management to integrate successfully the operations of the two companies could have a material adverse effect on the business and results of operations of the combined company.

The combined company may not fully realize the anticipated synergies and related benefits of the merger or within the timing anticipated.

 

Republic and Allied entered into the merger agreement because each company believes that the merger will be beneficial to each of Republic, Allied and their respective stockholders primarily as a result of the anticipated synergies resulting from the combined company’s operations. The companies may not be able to achieve the anticipated operating and cost synergies or long-term strategic benefits of the merger within the timing anticipated. For example, elimination of duplicative costs may not be fully achieved or may take longer than anticipated. For at least the first year after the merger, and possibly longer, the benefits from the merger will be offset by the costs incurred in integrating the businesses and operations, or adverse conditions imposed by regulatory authorities on the combined business in connection with granting approval for the merger. An inability to realize the full extent of, or any of, the anticipated synergies or other benefits of the merger, as well as any delays that may be encountered in the integration process, which may delay the timing of such synergies or other benefits, could have an adverse effect on the business and results of operations of the combined company, and may affect the value of the shares of Republic common stock after the completion of the merger.

 

The merger may not be accretive in the anticipated time, or at all, and may cause dilution to the combined company’s earnings per share, which may harm the market price of Republic common stock after the merger.

 

The parties currently anticipate that the merger will be accretive to earnings per share within the first full calendar year after the merger is complete. However, Republic and Allied have been able to conduct only limited planning regarding the integration of the two companies. Accordingly, this expectation is based on preliminary estimates which may materially change after the completion of the merger. The combined company could also encounter additional transaction and integration-related costs or other factors such as the failure to realize all of the benefits anticipated in the merger or a downturn in its business. All of these factors could cause dilution to the combined company’s earnings per share or decrease the expected accretive effect of the merger and cause a decrease in the price of Republic common stock after the merger.

 

The price of the common stock of the combined company may be affected by factors different from those affecting the price of Republic common stock or Allied common stock independently.

 

After completion of the merger, as the combined company integrates the businesses of Republic and Allied, the results of operations as well as the stock price of the combined company may be affected by factors different than those factors affecting Republic and Allied as independent stand-alone entities. The combined company may face additional risks and uncertainties not otherwise facing each independent company prior to the merger. For a discussion of Republic’s and Allied’s businesses and certain factors to consider in connection with their respective businesses, see the respective sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in each of Republic’s and Allied’s annual reports on Form 10-K for the year ended December 31, 2007 and quarterly reports on Form 10-Q for the period ended March 31, 2008 and other documents incorporated by reference into this joint proxy statement/prospectus.

 

Charges to earnings resulting from the application of the acquisition method of accounting may adversely affect the market value of Republic common stock following the merger.

 

In accordance with GAAP, Republic will be considered the acquiror of Allied for accounting purposes. Republic will account for the merger using the acquisition method of accounting. There may be charges related to the acquisition that are required to be recorded to Republic’s earnings that could adversely affect the market value of Republic common stock following the completion of the merger. Under the acquisition method of accounting, Republic will allocate the total purchase price to the assets acquired, including identifiable intangible assets, and liabilities assumed from Allied based on their fair values as of the date of the completion

of the merger, and record any excess of the purchase price over those fair values as goodwill. For certain tangible and intangible assets, revaluating them to their fair values as of the completion date of the merger may result in Republic’s incurring additional depreciation and amortization expense that may exceed the combined amounts recorded by Republic and Allied prior to the merger. This increased expense will be recorded by Republic over the useful lives of the underlying assets. In addition, to the extent the value of goodwill or intangible assets were to become impaired after the merger, Republic may be required to incur charges relating to the impairment of those assets.

 

If the merger is consummated subsequent to December 31, 2008, all transactions and restructuring costs will need to be expensed.

 

The preliminary purchase price allocation made in connection with the preparation of the pro forma financial statements included in this joint proxy statement/prospectus assumes the merger is consummated in 2008, and that it will be accounted for under Statement of Financial Accounting Standards No. 141, “Business Combinations.” Management believes the merger will be consummated in the fourth quarter of 2008. If the merger is consummated subsequent to December 31, 2008, it will be accounted for under Statement of Financial Accounting Standards No. 141 (revised 2007), “Business Combinations” (“SFAS 141(R)”), which is effective for Republic on January 1, 2009. SFAS 141(R) changes the methodologies for calculating purchase price and for determining fair values. It also requires that all transaction and restructuring costs related to business combinations be expensed as incurred, which will reduce earnings, and it requires that changes in deferred tax asset valuation allowances and liabilities for tax uncertainties subsequent to the acquisition date that do not meet certain remeasurement criteria be recorded in the income statement as well. The consolidated balance sheet and results of operations of the combined company would be materially different if the merger of Republic and Allied were accounted for under SFAS 141(R).

 

The combined company will incur significant transaction and merger-related costs in connection with the merger.

 

Republic and Allied expect to incur non-recurring costs of approximately $[          ] million to $[          ] million in the aggregate associated with combining the operations of the two companies, including payments and other charges of approximately $[          ] million to be made to some of their employees pursuant to “change in control” contractual obligations. The substantial majority of non-recurring expenses resulting from the merger will be comprised of transaction costs related to the merger, facilities and systems consolidation costs, and employee related costs. Republic and Allied will also incur transaction fees and costs related to formulating integration plans. Additional unanticipated costs may be incurred in the integration of the two companies’ businesses. The elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may not offset incremental transaction and other merger-related costs in the near term.

 

The combined company will have substantial indebtedness following the merger, which may limit its financial flexibility.

 

Following the completion of the merger, the combined company is expected to have approximately $8.4 billion in total debt outstanding and a higher debt to capital ratio than that of Republic on a stand-alone basis. This amount of indebtedness may limit the combined company’s flexibility as a result of the debt service requirements, and may limit the combined company’s ability to access additional capital and make capital expenditures and other investments in its business, to withstand economic downturns and interest rate increases, to plan for or react to changes in its business and its industry and to comply with financial and other restrictive covenants in its indebtedness.

 

Further, the combined company’s ability to comply with the financial and other covenants contained in its debt instruments may be affected by changes in economic or business conditions or other events beyond its control. If the combined company does not comply with these covenants and restrictions, it may be required to

take actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing all or part of its existing debt or seeking additional equity capital.

 

The waste industry is highly competitive and includes competitors that may have greater financial and operational resources, flexibility to reduce prices and other competitive advantages that could make it difficult for the combined company to compete effectively.

 

The combined company will compete with large national waste management companies, municipalities and numerous regional and local companies for collection and disposal accounts. The competition will primarily be on the basis of price and the quality of services. Some of these competitors may have greater financial and operational resources than the combined company. Some municipalities derive their financial resources from their constituent communities. These resources may allow them to reduce prices in order to expand sales volume or win competitive bids. Many counties and municipalities that operate their own waste collection and disposal facilities may have the benefits of tax revenues or tax-exempt financing. The combined company’s ability to obtain solid waste volume for its landfills may also be limited by the fact that some major collection companies also own or operate landfills to which they send their waste. In markets in which the combined company does not own or operate a landfill, its collection operations may operate at a disadvantage to fully integrated competitors. As a result of these factors, the combined company may have difficulty competing effectively from time to time or in certain markets. If the combined company were to lower prices to address these competitive issues, it could negatively impact its revenue growth and profitability.

 

Price increases may not be adequate to offset the impact of increased costs or may cause the combined company to lose volume.

 

The combined company will compete for collection accounts primarily on the basis of price and the quality of services. In addition, the combined company will seek to secure price increases necessary to offset increased costs, to improve operating margins and to obtain adequate returns on its substantial investments in assets such as its landfills. From time to time, the combined company’s competitors may reduce the price of their services in an effort to expand their market share. Contractual, general economic or market-specific conditions may also limit the combined company’s ability to raise prices. As a result of these factors, the combined company may be unable to offset increases in costs, improve operating margins and obtain adequate investment returns through price increases. The combined company may also lose volume to lower-cost competitors.

 

Increases in the cost of fuel or oil will increase operating expenses of the combined company and there can be no assurance that the combined company will be able to recover fuel or oil cost increases from its customers.

 

Republic’s and Allied’s operations are dependent on fuel to run their respective collection and transfer trucks and equipment. The combined company will buy fuel in the open market. Fuel prices are unpredictable and can fluctuate significantly based on events beyond the combined company’s control, including geopolitical developments, actions by the Organization of the Petroleum Exporting Countries and other oil and gas producers, supply and demand for oil and gas, war, terrorism and unrest in oil-producing countries and regional production patterns. The combined company may not be able to offset such volatility through fuel recovery fees. For example, Republic’s and Allied’s fuel costs were $192.0 million and $308.7 million in 2007, respectively, representing 9.6% and 8.2% of costs of Republic’s and Allied’s operations compared to $178.1 million and $291.6 million in 2006, respectively, representing 9.3% and 7.7% of costs of Republic’s and Allied’s operations. The increases primarily reflect an increase in the price of fuel.

 

In addition, regulations affecting the type of fuel used by Republic’s and Allied’s trucks are changing and could materially increase the cost and consumption of the combined company’s fuel. Each of Republic’s and Allied’s operations also require certain petroleum-based products (such as liners at each company’s landfills)

whose costs may vary with the price of oil. An increase in the price of oil could increase the cost of those products, which would increase the combined company’s operating and capital costs.

 

Downturns in the U.S. economy may have an adverse impact on the combined company’s operating results.

 

A weak economy generally results in decreases in the volumes of waste generated. In the past, weakness in the U.S. economy has had a negative effect on Republic’s and Allied’s operating results, including decreases in revenues, increases in costs and decreases in operating cash flows. Previous economic slowdowns have negatively impacted the portion of each company’s collection business servicing the manufacturing and construction industries. In the future, in an economic slowdown, the combined company may experience the negative effects of increased competitive pricing pressure and customer turnover as well. There can be no assurance that worsening economic conditions or a prolonged or recurring recession will not have a significant adverse impact on the combined company’s operating results or liquidity. Further, there can be no assurance that an improvement in economic conditions will result in an immediate, if at all positive, improvement in the combined company’s operating results or cash flows.

 

Adverse weather conditions may limit the combined company’s operations and increase the costs of collection and disposal.

 

The combined company’s collection and landfill operations could be adversely impacted by extended periods of inclement weather, which may interfere with collection and landfill operations, delay the development of landfill capacity or reduce the volume of waste generated by the combined company’s customers. In addition, weather conditions may result in the temporary suspension of the combined company’s operations, which could significantly affect the combined company’s operating results in the affected regions during those periods.

 

The combined company may be unable to execute its financial strategy.

 

The combined company’s ability to execute its financial strategy is dependent in part on its ability to maintain an investment grade rating on its senior debt. The credit rating process is contingent upon a number of factors, many of which are beyond the combined company’s control. Even if the combined company has investment grade credit ratings upon closing of the merger, it may not be able to maintain investment grade ratings. The combined company’s interest expense would increase and its ability to obtain financing on favorable terms may be adversely affected should it fail to maintain investment grade ratings.

 

The combined company’s financial strategy is also dependent in part on its ability to generate sufficient cash flow to reinvest in its existing businesses, fund internal growth, acquire other solid waste businesses, pay dividends, minimize borrowings and take other actions to enhance stockholder value. There can be no assurance that the combined company will be successful in executing its broad-based pricing program, that it will generate sufficient cash flow to execute its financial strategy, that it will be able to pay cash dividends at the same rate or that it will be able to increase the amount of such dividends.

 

The combined company may be unable to manage its growth effectively.

 

The combined company’s growth strategy will place significant demands on its financial, operational and management resources. In order to continue its growth, the combined company will need to add administrative and other personnel, and make additional investments in operations and systems. There can be no assurance that the combined company will be able to find and train qualified personnel, or do so on a timely basis, or expand its operations and systems to the extent, and in the time, required.

The combined company may be unable to execute its acquisition growth strategy.

 

The combined company’s ability to execute its growth strategy depends in part on its ability to identify and acquire desirable acquisition candidates as well as its ability to successfully consolidate acquired operations into its business. The consolidation of the combined company’s operations with the operations of acquired companies, including the consolidation of systems, procedures, personnel and facilities, the relocation of staff, and the achievement of anticipated cost savings, economies of scale and other business efficiencies, will present significant challenges to its management, particularly during the initial phases of integrating the operations of Allied and Republic. There can be no assurance that:

 

 

Additional factors may negatively impact the combined company’s acquisition growth strategy. The combined company’s acquisition strategy may require spending significant amounts of capital. If the combined company is unable to obtain additional needed financing on acceptable terms, it may need to reduce the scope of its acquisition growth strategy, which could have a material adverse effect on its growth prospects. The intense competition among companies pursuing the same acquisition candidates may increase purchase prices for solid waste businesses and increase the combined company’s capital requirements or prevent the combined company from acquiring certain acquisition candidates. If any of the aforementioned factors force management to alter the combined company’s growth strategy, the combined company’s growth prospects could be adversely affected.

 

Businesses the combined company acquires may have undisclosed liabilities.

 

In pursuing the combined company’s acquisition strategy, the combined company’s investigations of the acquisition candidates may fail to discover certain undisclosed liabilities of the acquisition candidates. If the combined company acquires a company having undisclosed liabilities, as a successor owner it may be responsible for such undisclosed liabilities. The combined company expects to try to minimize exposure to such liabilities by obtaining indemnification from each seller of the acquired companies, by deferring payment of a portion of the purchase price as security for the indemnification and by acquiring only specified assets. However, there can be no assurance that the combined company will be able to obtain indemnifications or that they will be enforceable, collectible or sufficient in amount, scope or duration to fully offset any undisclosed liabilities arising from acquisitions.

 

Allied currently has matters pending with the Internal Revenue Service (IRS), which could result in large cash expenditures and could have an adverse impact on the combined company’s operating results and cash flows.

 

Allied’s federal income tax returns for years 1998 through 2006 are currently under examination by the IRS. The federal income tax audit for Allied’s subsidiary, Browning Ferris Industries LLC’s (f/k/a Browning Ferris Industries, Inc.) tax years ended September 30, 1996 through July 30, 1999 is complete except for one matter. If the outstanding matter is decided against Allied, Allied estimates it could have a cash impact of approximately $134 million for federal and state taxes plus accrued interest through March 31, 2008 of approximately $67 million ($42 million net of tax benefit). Additionally, the IRS could ultimately impose penalties and interest on those penalties for any amount up to approximately $123 million, as of March 31, 2008, after tax. Because of the high interest rate being assessed on this matter, on February 13, 2008, Allied paid the IRS $196 million for tax and interest related to its 1999 income tax return. Later in 2008, Allied expects to pay the IRS and other tax authorities approximately $155 million of tax and interest related to this

matter, primarily associated with its 2000 through 2003 income tax returns. The payments do not represent a settlement with respect to the potential tax, interest or penalty related to this matter nor do they prevent Allied from contesting the IRS tax adjustment applicable to its 1999 through 2003 taxable years in a federal refund action.

 

Also, if an outstanding matter from 2002 relating to an exchange of partnership interests is decided against Allied, it estimates it could have a potential total cash impact of approximately $160 million for federal and state taxes, plus accrued interest through March 31, 2008 of approximately $40 million ($25 million, net of tax benefit). In addition, for both matters, the IRS could impose a penalty of up to 40% of the additional income tax due.

 

The potential tax and interest (but not penalties or penalty-related interest) impact of the above matters has been fully reserved on Allied’s consolidated balance sheet. With regard to tax and accrued interest through March 31, 2008, a disallowance would not materially affect Allied’s consolidated results of operations; however, a deficiency payment would adversely impact Allied’s cash flow in the period the payment was made. The accrual of additional interest charges through the time these matters are resolved will affect Allied or the combined company’s consolidated results of operations. In addition, the successful assertion by the IRS of penalties could have a material adverse impact on Allied or the combined company’s consolidated cash flows and results of operations.

 

Also, the IRS has proposed that certain landfill costs be allocated to the collection and control of methane gas that is naturally produced within the landfill. The IRS’ position is that the methane gas produced by a landfill is a joint product resulting from the operations of the landfill and, therefore, these costs should not be expensed until the methane gas is sold or otherwise disposed. Allied believes it has several meritorious defenses, including the fact that methane gas is not actively produced for sale by Allied but rather arises naturally in the context of providing disposal services. Therefore, Allied believes that the resolution of this issue will not have a material adverse impact on the combined company’s consolidated liquidity, financial position or results of operations.

 

For additional information on these matters, see Note 9, Income Taxes, to Allied’s consolidated financial statements in Item 8 of Allied’s Annual Report on Form 10-K for the year ended December 31, 2007 and Note 7, Income Tax to Allied’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008 and Allied’s Current Report on Form 8-K dated May 5, 2008, in which certain previously reported financial information was reclassified to reflect the realignment of their organizational structure during the first quarter of 2008. Other matters may also arise in the course of tax audits that could adversely impact the combined company’s consolidated liquidity, financial condition, and results of operations.

 

Fluctuations in prices for recycled commodities that the combined company sells to customers may adversely affect its revenues, operating income and cash flows.

 

Republic and Allied process recyclable materials such as paper, cardboard, plastics, aluminum and other metals for sale to third parties. The results of operations of the combined company may be affected by changing prices or market requirements for recyclable materials. The resale and purchase prices of, and market demand for, recyclable materials can be volatile due to numerous factors beyond the combined company’s control. These fluctuations may affect the combined company’s future revenues, operating income and cash flows.

 

The combined company may be subject to influences of the workforce, including work stoppages, which could increase its operating costs and disrupt its operations.

 

As of March 31, 2008, approximately 29.25% of Republic’s and Allied’s combined workforces were represented by various local labor unions. If, in the future, the combined company’s unionized workers were to engage in a strike, work stoppage or other slowdown, it could experience a significant disruption of its operations and an increase in its operating costs, which could have an adverse impact on its results of

operations and cash flows. In addition, if a greater percentage of the combined company’s workforce becomes unionized, the combined company’s business and financial results could be materially and adversely impacted due to the potential for increased operating costs.

 

The combined company will be subject to costly environmental regulations that may affect the combined company’s operating margins, restrict its operations and subject the combined company to additional liability.

 

The combined company’s compliance with laws and regulations governing the use, treatment, storage, transfer and disposal of solid and hazardous wastes and materials, air quality, water quality and the remediation of contamination associated with the release of hazardous substances will be costly. Laws and regulations often require Republic and Allied to enhance or replace their equipment and to modify landfill operations or initiate final closure of a landfill. There can be no assurance that the combined company will be able to implement price increases sufficient to offset the cost of complying with these laws and regulations. In addition, environmental regulatory changes could accelerate or increase expenditures for capping, closure, post-closure and environmental remediation activities at solid waste facilities and obligate the combined company to spend sums in addition to those presently accrued for such purposes.

 

In the future, the combined company’s collection, transfer and landfill operations may also be affected by proposed federal and state legislation that may allow individual states to prohibit the disposal of out-of-state waste or to limit the amount of out-of-state waste that can be imported for disposal and may require states, under some circumstances, to reduce the amount of waste exported to other states. If this or similar legislation is enacted in states in which the combined company operates landfills that receive a significant portion of waste from out-of-state, the combined company’s operations could be negatively affected due to a decline in landfill volumes and increased cost of alternate disposal. The United States Congress could also propose “flow control” legislation, which may allow states and local governments to direct waste generated within their jurisdiction to a specific facility for disposal or processing. If this or similar legislation is enacted, state or local governments with jurisdiction over any of the combined company’s landfills could act to limit or prohibit disposal or processing of waste in any of the combined company’s landfills.

 

In addition to the costs of complying with environmental regulations, Republic and Allied incur costs to defend against litigation brought by government agencies and private parties who may allege Republic or Allied is in violation of its permits and applicable environmental laws and regulations, or who assert claims alleging environmental damage, personal injury or property damage. As a result, the combined company may be required to pay fines or implement corrective measures, or may have its permits and licenses modified or revoked. A significant judgment against the combined company, the loss of a significant permit or license or the imposition of a significant fine could have a material adverse impact on the combined company’s consolidated liquidity, financial condition or results of operations.

 

The combined company may be unable to obtain or maintain required permits or to expand existing permitted capacity of its landfills, which could decrease its revenues and increase its costs.

 

There can be no assurance that the combined company will successfully obtain or maintain the permits it will require to operate its business because permits to operate non-hazardous solid waste landfills and to expand the permitted capacity of existing landfills have become more difficult and expensive to obtain. Permits often take years to obtain as a result of numerous hearings and compliance with zoning, environmental and other regulatory requirements. These permits are also often subject to resistance from citizen or other groups and other political pressures. Local communities and citizen groups, adjacent landowners or governmental agencies oppose the issuance of a permit or approval the combined company may need, allege violations of the permits under which Republic or Allied currently operates or laws or regulations to which Republic or Allied is subject, or seek to impose liability on the combined company for environmental damage. Responding to these challenges has, at times, increased Republic’s and Allied’s costs and extended the time associated with establishing new facilities and expanding existing facilities. In addition, failure to receive regulatory and zoning approval may prohibit the combined company from establishing new facilities, maintaining permits for its facilities or expanding existing facilities. The combined company’s failure to obtain the required permits to

operate non-hazardous solid waste landfills could hinder its ability to implement its vertical integration strategy and have a material adverse impact on its future results of operations as 12.6% and 13.7% of Republic’s and Allied’s third-party revenues in 2007, respectively, were generated from their landfills. Additionally, landfills typically operate at a higher margin than Republic’s and Allied’s other operations. The combined company also could incur higher costs due to the fact that it would be required to dispose of its waste in landfills owned by other waste companies or municipalities.

 

The combined company may have potential environmental liabilities that are not covered by its insurance; changes in insurance markets may impact the combined company’s financial results.

 

The combined company may incur liabilities for the deterioration of the environment as a result of its operations. The combined company will maintain high deductibles for its environmental liability insurance coverage. If the combined company were to incur substantial liability for environmental damage, its insurance coverage may be inadequate to cover such liability. This could have a material adverse impact on the combined company’s liquidity, financial condition and results of operations.

 

Also, due to the variable condition of the insurance market, the combined company may experience in the future increased self-insurance retention levels and increased premiums. As the combined company assumes more risk for self-insurance through higher retention levels, it may experience more variability in its self-insurance reserves and expense.

 

Despite the combined company’s efforts, it may incur additional hazardous substances liability in excess of amounts presently known and accrued.

 

Each of Republic and Allied is a potentially responsible party at various sites under CERCLA, which provides for the remediation of contaminated facilities and imposes strict, joint and several liability, for the cost of remediation on current owners and operators of a facility at which there has been a release or a threatened release of a “hazardous substance”, on former site owners and operators at the time of disposal of the hazardous substance(s) and on persons who arrange for the disposal of such substances at the facility (i.e., generator of the waste and transporters who selected the disposal site). Hundreds of substances are defined as “hazardous” under CERCLA and their presence, even in minute amounts, can result in substantial liability. Notwithstanding the combined company’s efforts to comply with applicable regulations and to avoid transporting and receiving hazardous substances, the combined company may have future additional liability under CERCLA or similar laws in excess of current reserves because such substances may be present in waste collected by the combined company or disposed of in the combined company’s landfills, or in waste collected, transported or disposed of in the past by acquired companies. In addition, actual costs for these liabilities could be significantly greater than amounts presently accrued for these purposes.

 

The combined company cannot assure you that it will continue to operate its landfills at currently estimated volumes due to the use of alternatives to landfill disposal caused by state requirements or voluntary initiatives.

 

Most of the states in which Republic and Allied operate landfills require counties and municipalities to formulate comprehensive plans to reduce the volume of solid waste deposited in landfills through waste planning, composting and recycling or other programs. Some state and local governments mandate waste reduction at the source and prohibit the disposal of certain types of wastes, such as yard wastes, at landfills. Although such actions are useful to protect the environment, these actions, as well as voluntary private initiatives by customers to reduce waste or seek disposal alternatives, may reduce the volume of waste going to landfills in certain areas. If this occurs, there can be no assurance that the combined company will be able to operate its landfills at the current estimated volumes or charge current prices for landfill disposal services due to the decrease in demand for such services.

 

If the combined company is unable to execute its business strategy, its waste disposal expenses could increase significantly.

 

Implementation of the combined company’s vertical integration strategy will depend on its ability to maintain appropriate collection operations, transfer stations and landfill capacity. The combined company cannot assure you that it will be able to replace such assets either timely or cost effectively. The combined

company cannot assure you that it will be successful in expanding the permitted capacity of its current landfills once its landfill capacity is full. In such event, the combined company may have to dispose of collected waste at landfills operated by its competitors or haul the waste long distances at a higher cost to another of its landfills, either of which could significantly increase its waste disposal expenses. Any such failure could seriously harm the combined company’s business, financial condition, results of operations and cash flows.

 

The solid waste industry is a capital-intensive industry and the amount the combined company will spend on capital expenditures may exceed its current expectations, which could require it to issue additional equity or debt to fund its operations or impair its ability to grow its business.

 

The combined company’s ability to be competitive and expand operations largely depends on its cash flow from operations and access to capital. Republic and Allied spent $293 million and $670 million, respectively, on capital expenditures during 2007 and expect to spend approximately $335 million and $650 million, respectively, in 2008. If the combined company’s capital efficiency programs are unable to offset the impact of inflation and business growth, it may be necessary to increase the amount it spends.