Byline: Dan Culloton Daily Herald Business Writer
The proposed merger of USA Waste Services Inc. with Waste Management Inc. hangs like a Sword of Damocles over the employees at the latter company's Oak Brook headquarters.
More than a fourth of the $800 million in annual cost savings the two companies hope to realize in their marriage would come from cutting redundant administration.
The rest would come from integrating landfills and consolidating collection routes and transfer stations.
But the proposed administrative cuts do not auger well for the more than 1,600 people Waste Management employs in Oak Brook, said Robert Friedman, an analyst with Standard & Poor's Equity Group in New York.
The combined company is expected to need the Waste Management employees who drive the trucks and man the transfer stations in the field, but it may not need much of its management and office help, observers say.
"I would just imagine that USA's management is going to run the show at Waste Management," Friedman said.
That's the idea, said Waste Management's interim chief executive, Robert S. "Steve" Miller. The deal, announced Wednesday, solves a management vacuum at Waste Management, a company that has had four chief executives in the last 15 months.
Wall Street also is applauding the deal. The announced value of the deal was $13.5 billion, but Wall Street traders bid the price of the stock transaction up to more than $14.8 billion Wednesday. The new company also will assume Waste Management's $7 billion of debt.
On Thursday, Waste Management's stock closed up $1.06 at $30.37 while USA Waste's shares finished up $2 at $45 on the New York Stock Exchange.
The new company will be called Waste Management, but it's clear it will be run like USA Waste.
USA Waste Chairman John E. Drury will head the combined company from his current headquarters in Houston. He has said he would waste no time in applying USA Waste's operating strategy to Waste Management. …