ADSW Advanced Disposal Services Inc

On April 14, 2019, Advanced Disposal Services, Inc., a Delaware corporation (the “ Company ”), entered into an Agreement and Plan of Merger (the “ Merger Agreement ”) with Waste Management, Inc., a Delaware corporation (“ Parent ”), and Everglades Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Parent (“ Merger Sub ”).

The Merger Agreement provides that, upon the terms and subject to the conditions set forth in the Merger Agreement, Merger Sub will merge with and into the Company (the “ Merger ” and, collectively with the other transactions contemplated by the Merger Agreement, the “ Transactions ”), with the Company continuing as the surviving corporation and as a wholly-owned subsidiary of Parent.

At the effective time of the Merger (“ Effective Time ”), each share of common stock, par value $0.01 per share, of the Company (the “ Common Stock ”), issued and outstanding immediately prior to the Effective Time (other than shares of Common Stock (i) owned by the Company, Parent, Merger Sub or any of their respective subsidiaries or (ii) for which appraisal rights have been demanded properly in accordance with Section 262 of the General Corporation Law of the State of Delaware), shall be converted into the right to receive $33.15 per share in cash, without interest (the “ Per Share Merger Consideration ”).

At the Effective Time, each vested and unvested option of the Company with a per share exercise price less than the Per Share Merger Consideration that is outstanding at the Effective Time will convert into the right to receive a cash amount equal to the product of (i) the number of shares of Common Stock subject to the option multiplied by (ii) the excess of the Per Share Merger Consideration over the per-share exercise price of such option, net of taxes.  At the Effective Time, each performance share unit award outstanding as of immediately prior to the Effective Time will convert into the right to receive a cash payment equal to the product of (i) the number of shares of Common Stock equal to the greater of (x) the target number of shares of Common Stock with respect to such performance share unit award and (y) the number of shares of Common Stock that would be considered earned under the terms of such performance share unit award based on the most recent fiscal year-end results of the Company preceding the fiscal year during which the Effective Time occurs multiplied by (ii) the Per Share Merger Consideration.

At the Effective Time, each restricted share unit award and restricted share award outstanding immediately prior to the Effective Time will convert into the right to receive a cash payment equal to the product of (i) the number of shares of Common Stock subject to such restricted share unit award or restricted share award multiplied by (ii) the Per Share Merger Consideration.

The Board of Directors of the Company (the “ Board ”) has unanimously (i) determined that the Merger Agreement and the Transactions are fair to, and in the best interests of, the Company and its stockholders, (ii) approved and declared it advisable the Merger Agreement and the Transactions, including the Merger, (iii) approved the execution, delivery and performance by the Company of the Merger Agreement and the consummation of the Transactions, including the Merger, upon the terms and subject to the conditions set forth in the Merger Agreement, (iv) recommended the adoption of the Merger Agreement by the stockholders of the Company, and (v) directed that the adoption of the Merger Agreement be submitted to a vote of the Company’s stockholders.

The consummation of the Merger (the “ Closing ”) is subject to certain conditions, including (i) the affirmative vote of the holders of a majority of the outstanding shares of Common Stock (the “ Stockholder Approval ”), (ii) the expiration or termination of any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, and (iii) the absence of any law or order restraining, enjoining or otherwise prohibiting the Merger.  Each of Parent’s, Merger Sub’s, and the Company’s obligation to consummate the Merger is also subject to additional customary conditions, including (x) subject to specific standards, the accuracy of the representations and warranties of the other party, (y) performance in all material respects by the other party of its obligations under the Merger Agreement, and (z) with respect to Parent’s and Merger Sub’s obligations to consummate the Merger, the absence of a Material Adverse Effect (as defined in the Merger Agreement).

The Company has made customary representations and warranties in the Merger Agreement and has agreed to customary covenants regarding the operation of the business of the Company and its subsidiaries prior to the earlier of the Closing or the date that the Merger Agreement is terminated in accordance with its terms.  Each of Parent and Merger Sub has agreed to customary covenants related to treatment of employees and their compensation and benefits after Closing, including commitments to honor severance arrangements and provide full bonuses (at target levels for all bonus-eligible employees, including executive officers) in connection with the Transactions.

The Company is also subject to customary restrictions on its ability to solicit acquisition proposals from third parties, to provide information to, and enter into discussions or negotiations with, third parties regarding alternative acquisition proposals, and to withdraw its recommendation in favor of the Merger.  However, prior to the Stockholder Approval, these restrictions are subject to customary “fiduciary out” provisions that allow, under certain circumstances, (i) the Company to provide information to, and enter into discussions or negotiations with, third parties with respect to an acquisition proposal if the Board determines in good faith, after consultation with and taking into account the advice of, the Company’s financial advisor and outside legal counsel, that that such alternative acquisition proposal could reasonably be expected to constitute or result in a superior proposal and that failure to take such actions would be inconsistent with its fiduciary duties and (ii) the Board to withdraw or change its recommendation in favor of the Merger if it determines that its failure to take such action would be inconsistent with its fiduciary duties.

The Merger Agreement also includes customary termination provisions for both the Company and Parent and provides that, in connection with the termination of the Merger Agreement, under specified circumstances, the Company will be required to pay Parent a termination fee of $100,000,000, including if (i) the Company enters into an acquisition agreement with respect to a superior proposal prior to obtaining the Stockholder Approval or (ii) the Board changes its recommendation or takes similar actions prior to the meeting of the stockholders.  The Merger Agreement further provides that, upon termination of the Merger Agreement under specified circumstances, the Company will be required to pay to Parent up to $15,000,000 for expenses incurred by Parent (with such payment credited to any termination fee subsequently paid by the Company).

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The Merger Agreement also provides that Parent will be required to pay to the Company a reverse termination fee of $150,000,000 under certain circumstances specified in the Merger Agreement if the Merger Agreement is terminated because (i) of the issuance of a nonappealable court order or legal restraint prohibiting the transaction for antitrust reasons or (ii) the transactions have not been consummated by a certain outside date, and at such time, antitrust approval for the transaction has not been obtained but the other conditions to Closing have been satisfied.

Parent is required to (i) use its reasonable best efforts to take all actions to consummate the Merger, including using its reasonable best efforts to obtain antitrust approval and (ii) specifically commit to divest or sell assets and take other actions in connection with using its reasonable best efforts to obtain antitrust approval up to certain limits specified in the Merger Agreement.  The Company is required to cooperate with Parent in connection with Parent’s efforts to obtain antitrust approval.

In addition, concurrently with the execution of the Merger Agreement, on April 14, 2019, Canada Pension Plan Investment Board (the “ Key Stockholder ”) representing approximately 19% of the outstanding Common Stock of the Company entered into a Voting and Support Agreement (the “ Voting Agreement ”) with Parent, pursuant to which, among other things, and subject to the terms and conditions set forth therein, the Key Stockholder agreed to vote its shares of Common Stock in favor of the adoption of the Merger Agreement and against any alternative proposal.  The Voting Agreement automatically terminates upon the earliest to occur of (i) the Expiration Time (defined in the Voting Agreement as the earlier to occur of (x) the Effective Time and (y) such date and time as the Merger Agreement has been validly terminated in accordance with its terms) and (ii) the election of the Key Stockholder in its sole discretion to terminate the Voting Agreement promptly following any amendment of any term in the original Merger Agreement that reduces or changes the form of consideration payable under the Merger Agreement.

The Merger Agreement includes customary representations, warranties, and covenants of the Company made solely for the benefit of Parent and Merger Sub.  The assertions embodied in those representations and warranties were made solely for purposes of allocating risk among the Company, Parent and Merger Sub rather than establishing matters of fact and may be subject to important qualifications and limitations agreed to by the Company, Parent, and Merger Sub in connection with the negotiated terms.  Moreover, some of those representations and warranties may not be accurate or complete as of any specified date, may be subject to a contractual standard of materiality different from those generally applicable to the Company’s filings with the U.S. Securities and Exchange Commission (the “ SEC ”) or may have been used for purposes of allocating risk among the Company, Parent, and Merger Sub rather than establishing matters as facts.  Investors should not rely on the representations, warranties, and covenants or any description thereof as characterizations of the actual state of facts of the Company or any of its subsidiaries or affiliates.

If the Merger is consummated, the Common Stock will be delisted from New York Stock Exchange and deregistered under the Securities Exchange Act of 1934.

This summary of the principal terms of the Merger Agreement, a copy of which is filed as Exhibit 2.1, and incorporated herein by reference, is intended to provide information regarding the terms of the Merger Agreement and are not intended to modify or supplement any factual disclosures about the Company in its public reports filed with the SEC.  In particular, the Merger Agreement and related summary are not intended to be, and should not be relied upon as, disclosures regarding any facts and circumstances relating to the Company.

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