Is Waste's Management Trashing Stock's Value?

Waste Management might be feeling slighted after Republic Services rejected not one but two separate takeover offers. Investors, too, might feel scorned since the stock isn’t as high as Cramer thinks it should be as a result.

Republic had already agreed to a merger with Allied Waste back in June before Waste Management asked to cut in on July 14 with a $34 a share offer. Republic said no thanks to that as well as a second offer of $37 a share.

At this point, Cramer’s expressing doubt the deal makes sense, at least for shareholders. But CEO David Steiner, in the studio Wednesday, insisted a WMI-RSG merger brings together two strong companies with great assets. The deal makes perfect sense, he said, both for WMI and its investors.

“We’re all about shareholder value,” Steiner said. “We’re not going to do a deal that doesn’t create both short-term and long-term value for our shareholders. Our bid at this price does exactly that.”

Cramer pointed out that WMI cut some unprofitable business from its balance sheet last quarter, and that were it not for this attempted acquisition, the stock would be as high as $40. Steiner said he agreed that WMI was undervalued right now.

But regardless of which way Republic decides to go – to WMI or Allied – it may work out for everyone. A merging of assets for WMI and RSG would work well, and a combined Allied-Republic might impose more price discipline on the industry as a whole.

“This is not Yahoo!-Google , where we have to have this strategically,” Steiner said. “I think we are the only player of the three that either way we win.”

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