updated 7/14/2008 6:33:15 PM ET 2008-07-14T22:33:15

Waste Management, the nation's largest garbage hauler, on Monday made an unsolicited offer to buy disposal company Republic Services Inc. for $6.19 billion in cash, aiming to squash a possible combination of two U.S. rivals.

The deal represented a counter offer to the proposed combination of Republic Services and Allied Waste Industries announced in late June.

No. 2 Republic Services offered to buy No. 3 Allied Waste Industries in a $6.07 billion stock deal.

Republic said its board of directors will review the $34 per share offer from Waste Management and respond "in due course."

The per share offer represents a 22 percent premium to Fort Lauderdale, Fla.-based Republic Services closing stock price of $27.90 on Friday.

Republic Services had about 181.9 million shares outstanding as of April 25.

"Our proposal clearly offers a better and more certain value alternative to Republic stockholders than the recently announced Republic-Allied Waste transaction," said Waste Management Chief Executive David P. Steiner. "We believe our proposal is a superior proposal."

Waste Management expects that the deal, if completed, will boost its earnings in the first year and provide cost savings of at least $150 million.

Waste Management also said Monday it expects second-quarter earnings to beat Wall Street's expectations.

The company predicts a profit of 64 cents per share, or an adjusted profit of 61 to 62 cents per share. It predicts sales will rise 4 percent to $3.49 billion.

Analysts polled by Thomson Financial, on average, expect earnings of 58 cents per share on revenue of $3.42 billion.

The Houston-based company will announce second-quarter results on July 29.

Steiner told analysts in a conference call Monday that the company did not seek the deal with Republic.

"We did not go out looking for this deal and did not contemplate making an unsolicited offer for Republic, but when Republic was put into play as result of their agreement with Allied, we were presented with an opportunity we felt we could not ignore," he said.

Steiner said the move does not signal a return to a strategy of growth through acquisition.

"Once we close this transaction we will spend all of our time and efforts to ensure a smooth integration," he said. "We will not look to make any other significant acquisitions."

He said Waste Management is at a disadvantage because officials have not been provided the same information as given to Allied.

A message seeking comment was left with a spokesman for Republic.

Goldman Sachs analyst David Feinberg said in a note to clients Monday that Waste Management's offer appears aimed at a clause within the Allied Waste-Republic Services merger agreement whereby management must consider "superior offers."

Feinberg expected the announcement to pressure Waste Management's shares, but said the company's positive second-quarter earnings outlook Monday gives him confidence in his "Conviction Buy" rating.

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