MAY 2009
Republic and Allied: The first 100 days
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Republic Services merged with Allied Waste a little over four months ago. Both companies report that the transition was smooth and the merger a success. The merger increased the number of landfills owned by Republic from 59 to 213 with synergistic savings of $150 million.

Last December Republic Services, Inc. and Allied Waste Industries, Inc. completed their merger, which created the second largest waste and environmental services company in the States, now operating as Republic Services, Inc. The hundred day mark has come and gone, and though the honeymoon may be over, the combined companies still seem to be thriving.

The merger of the companies only happened after a long courtship where each partner had time to get acquainted and learn each other’s strengths and weaknesses. “What’s interesting is that there had been talks between the two companies for almost five years. It wasn’t until the early part of 2008 when the conversations were reinitiated and the deal ultimately came together,” said Doug Borro, Republic’s vice president of program management for the merger.

A quick overview of the deal: Republic, with approximately $3.3 billion in 2008 revenues, acquired Allied with approximately $6.1 billion in 2008 revenues through an all stock transaction. Proforma guidance for 2009 is $8.4 billion.

A week after the June merger announcement, the functional leaders of both companies held an engagement party in Floridia. Doug Borro commented on the cocktail party before the formal meeting, “The level of camaraderie was uncanny. We all seemed to gravitate towards our counterparts at the other company and the emotional merger was immediate. I was with Allied during the BFI acquisition and while we did the mechanical merger it was a very hard emotional merger between the people.”

Will Flower, Republic’s executive vice president of communications, believes that Republic people developed an immediate respect and admiration for Allied people. “We never saw an us versus them mentality develop.”

Borro has been in the waste industry for over 20 years and came to Allied as part of the Laidlaw acquisition in 1989. “The difference between this merger and other acquisitions and mergers we’ve done is really the focus on people. It’s the recognition that it’s not the billing systems, it’s not the facilities. You have to have all the people aligned to understand what their job is. That’s the factor that makes the difference between a good merger and a poor one. They have to be confident in doing their job and be motivated.”

The bond between the companies became ever stronger during the due diligence period when Waste Management (WM) made an unsolicited hostile takeover bid for Republic. “I believe the move by WM galvanized the Republic and Allied teams together in a way that has given us tremendous benefits,” said Flower.

The first stage of strategic planning began immediately after the merger announcement with a proactive communications effort on a number of fronts. A weekly “RE-AL Deal” newsletter kept both companies’ employees informed on merger details. They launched a merger-specific website,, to provide open, current communications on all developments for employees and the public. “The one consistent theme about a successful merger is a pronounced communications effort for your employees, vendors, customers and investors,” said Flower.

The communications program also included daily and weekly meetings and phone conferences and posting pre and post merger videos on YouTube by Jim O’Connor, Republic’s chairman and CEO. O’Connor, no mere business man, has changed a transmission in a garbage truck, so he knows both the everyday gritty jobs, as well as the interior of the corporate jet, which was busier than ever as an airborne meeting room.

The next phase was the development of a “Day One Playbook” that would take the new organization through the first 30 days and was robust enough to complete the integration of systems and infrastructure. This was a plan that evolved from the beginning and is still evolving today, but began with a very clever, pragmatic approach. The integration team developed a list of everyone in both companies who had gone through a significant merger and asked them questions, such as: What went wrong? What went right? What should have been done differently? From this knowledge, the four-person corporate integration team compiled over a thousand tasks in the playbook for implementing details at the general manager (GM) level. It was all practical, front line guidance like moving trucks, buying or renting property and was not concerned with over-arching corporate systems like IT or billing. “It is a menu that a GM can pick and choose from on what is occurring in that market and helps build-out a tailored plan for that particular market,” said Borro.

As a result of the merger, Republic now has 400 hauling companies, 242 transfer stations, 213 landfills and 78 recycling plants. The highest priorities were in 17 to 20 markets where Republic and Allied services overlapped and that affected about 140 divisions. Republic operates under about 100 different names in local markets and those names will remain. The new corporate identity is a low priority. In those critical, complex overlapping markets everything in the playbooks was geared to a 120-day countdown to get people, assets, billing and hauling systems in place. These were strategic, task-scheduled plans to complete successful mergers at each location.

To manage these integrations, five project integration teams were formed, each consisting of a project manager and a management trainee. “We included trainees to build talent by exposing them to our business so when we are done we will have a stronger team in place,” Borro commented. The integration teams traveled from business to business on a priority basis and assisted the GM’s team to complete tasks. “They would have weekly teleconferences with corporate for problem-resolution so we had a real fix on issues in each market,” said Flower.

“In our case we had two mature, successful companies that had a series of strong processes that were working and continue to work today. We’re picking the best of the best and are on version 17 of the playbook. We get updates from the field, make changes in the playbook and implement for the next round,” Borro said.

In accordance with the merger agreement with the United States Department of Justice, Republic is in the process of divesting six municipal solid waste landfills, six collection operations and three transfer stations located in seven markets. “As these assets come to market we get a lot of interest and expect a premium price,” said Flower. “Divestiture is on-track with several letters of sale agreements and we expect to close all sales in the second quarter.” The proceeds for the sale of the assets will be used for debt reduction.

Of course, the real prize in a successful merger is the synergistic cost savings and ongoing operational efficiencies. Republic estimated synergy savings at $150 million with about $90 to $100 million coming in cuts to personnel and overhead. Two corporate offices and eight regional offices were reduced to one corporate and four regional offices. Most of the layoffs occurred when Republic closed its Fort Lauderdale headquarters and relocated to Phoenix. There were also some staff reductions in field offices due to redundant positions and the slower economy. A total of about 400 jobs were eliminated. Republic now has fewer than 35,000 employees and believes it is right-sized, lean and structured properly to perform comfortably.

It is the ongoing operational efficiencies, however, that really made this merger work. Republic went from having 59 landfills before the merger to 213 afterward. More disposal outlets cut time and hauling costs, saves money and results in better customer service.

“One thing that we learned before we started, when we interviewed the employees who have gone through mergers is that this doesn’t have to be done overnight. We don’t want to drag it out, we want to do it right,” Borro added.

“When you look at the reasons for this merger, whether in a good economy or a weak economy those reasons were good. It’s like a good marriage. If two people are right to be together it doesn’t matter what the economy is like, it’s a good time to get married,” Flower said.