Could Stericycle Be Up for Sale?

Jana Partners, the activist hedge fund, has announced that it has a stake in Stericycle (SRCL). They haven’t said if they want to shake things up at SRCL, at least not yet, but that’s what they’re known to do.

The stock is down this year, which of course means it would be more attractive to a potential buyer. So is a buyout in the works?

If Stericycle were to be pressured into exploring a sale, Waste Management could be a potential buyer. Stifel analysts reckon a tie-up between the two would be “compelling” and deliver some $100 million in synergies. Factoring in those cost savings, a deal representing a 25 percent premium to Stericycle’s current price would be immediately accretive to Waste Management’s earnings per share, regardless of the transaction’s cash-and-stock mix, according to data compiled by Bloomberg. It helps that Waste Management CEO David Steiner and CFO James Fish said on an April earnings call that the company could go after a big acquisition if it was strategic and reasonably priced.

Last month, Stericycle said they’re forecasting full-year 2016 earnings between $4.90 and $5.05 per share. Wall Street had been expecting $5.22 per share. In my opinion, if the company can clear $5 per share this year, I think the pressure to sell would dissipate and the stock would rally.

Posted by on May 17th, 2016 at 7:12 pm


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