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Item 1.01
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Entry into a Material Definitive Agreement.
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Amendment to Agreement and Plan of Merger
On June 24, 2020, Advanced Disposal
Services, Inc., a Delaware corporation (the “Company” or “Advanced Disposal”), entered into
Amendment No. 1 (the “Amendment”) to the previously announced Agreement and Plan of Merger, dated as of April
14, 2019 (the “Original Agreement,” as amended by the Amendment, the “Merger Agreement”),
with Waste Management, Inc., a Delaware corporation (“Waste Management”), and Everglades Merger Sub Inc., a
Delaware corporation and a wholly-owned subsidiary of Waste Management (“Merger Sub”). As previously disclosed,
pursuant to the terms and subject to the conditions set forth in the Original Agreement as amended by the Amendment, Merger Sub
will merge with and into the Company (the “Merger” and, collectively with the other transactions contemplated
by the Original Agreement as amended by the Amendment, the “WM Transactions”), with the Company continuing as
the surviving corporation and as a wholly-owned, indirect subsidiary of Waste Management.
Pursuant to the Merger Agreement, the Company,
Waste Management and Merger Sub have agreed to reduce the per share merger consideration to be paid by Waste Management at the
effective time of the Merger (the “Effective Time”) for each share of the Company’s common stock, par
value $0.01 per share (the “Common Stock”), issued and outstanding immediately prior to the Effective Time (other
than shares of Common Stock (i) owned by the Company, Waste Management, 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) to $30.30 per share in cash, without interest.
The Amendment also extends the date after
which each of the Company and Waste Management have a right to terminate the Merger Agreement (the “End Date”)
from July 13, 2020 to September 30, 2020, which will be further extended automatically to November 30, 2020 if, subject to certain
conditions, Advanced Disposal stockholder approval or approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended (“HSR Approval”) has not been obtained by September 30, 2020.
In addition, the Amendment eliminated the
limitations on the divestiture obligation of Waste Management contained in the Original Agreement. As a result of the Amendment,
Waste Management is specifically required to use its “best efforts” to obtain HSR Approval, including, without limitation,
to sell, divest, dispose or license any assets, operations, services or businesses (belonging to Waste Management or Advanced Disposal
or any of their respective subsidiaries) in order to obtain HSR Approval.
Waste Management is required to pay Advanced
Disposal a termination fee of $250,000,000 (the “Waste Management Termination Fee”) if the Merger Agreement
is terminated by the Company under certain circumstances because: (i) a nonappealable court order or legal restraint has been issued
prohibiting the Merger due to antitrust reasons; or (ii) the WM Transactions have not been completed by the End Date, and at such
time, HSR Approval has not been obtained.
Pursuant to the Amendment, each party
has certified to each other that such party’s closing conditions with respect to the accuracy of its representations
and performance of its covenants, and, with respect to Waste Management’s and Merger Sub’s obligations to
consummate the Merger, the absence of a Material Adverse Effect (as defined in the Merger Agreement), would be satisfied as
of June 24, 2020 if the closing of the Merger were to be June 24, 2020. In addition, each of the parties acknowledged that,
to the parties’ respective knowledge, as of the date of the Amendment, no occurrence has occurred that would prevent
the closing of the Merger (the “Closing”). Waste Management and Merger Sub have also agreed to not assert
that any of such conditions are not satisfied at the Closing as a result of what such parties had knowledge of as of the date
of the Amendment.
Pursuant to the Amendment, Advanced Disposal
is no longer required to reimburse Waste Management’s expenses of up to $15,000,000 if the Merger Agreement is terminated
by either Advanced Disposal or Waste Management as a result of a failure to obtain the Advanced Disposal stockholder approval.
The Board of Directors of the Company
(the “Board”) has unanimously (i) determined that the Merger Agreement and the WM Transactions are fair
to, and in the best interests of, the Company and its stockholders, (ii) approved and declared advisable the Merger Agreement
and the WM Transactions, including the Merger, (iii) approved the execution and delivery by the Company of the Amendment and
the performance by the Company of the Merger Agreement and the consummation of the WM 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 Closing is subject to certain conditions,
including (i) the affirmative vote of the holders of a majority of the outstanding shares of Common Stock, (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 the Company’s, Waste Management’s and Merger Sub’s obligation to consummate the Merger is
also subject to additional conditions, including (x) subject to specific standards and as limited as described above, 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 Waste Management’s and Merger Sub’s obligations to consummate the
Merger, the absence of a Material Adverse Effect (as defined in the Merger Agreement) as further described in the Merger Agreement.
In addition, concurrently with the execution
of the Amendment, on June 24, 2020, Canada Pension Plan Investment Board (the “Key Stockholder”), representing
approximately 18% of the outstanding Common Stock, entered into an amendment and restatement of the previously announced Voting
and Support Agreement (as amended, the “Voting Agreement”) with Waste Management, pursuant to which, among other
things, and subject to the terms and conditions set forth therein, the Key Stockholder agreed under the terms of the agreement
to vote its shares of Common Stock in favor of the adoption of the Original Agreement as amended by the Amendment and against any
alternative proposal.
Other than as expressly modified pursuant
to the Amendment, the Original Agreement, which was previously filed as Exhibit 2.1 to the Current Report on Form 8-K filed by
the Company with the U.S. Securities and Exchange Commission on April 15, 2019, remains in full force and effect. The foregoing
description of the Amendment and the WM Transactions does not purport to be complete and is qualified in its entirety by reference
to the Amendment, a copy of which is filed as Exhibit 2.1 hereto and is incorporated herein by reference, and the Original Agreement.
In connection with entering into the Amendment, on June 24, 2020, the Company
entered into a Securities and Asset Purchase Agreement (the “Purchase Agreement”) with GFL Holdco (US), LLC,
a Delaware limited liability company (“GFL”), Waste Management, and GFL Environment Inc., a corporation organized
under the laws of the Province of Ontario (solely for the purposes set forth in the Purchase Agreement) at the request of Waste
Management in furtherance of the transactions contemplated by the Merger Agreement. The Company is executing the Purchase Agreement
in order to address substantially all of the divestitures anticipated to be required by the U.S. Department of Justice (the “DOJ”)
to obtain approval under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, for the WM Transactions.
Pursuant to the terms and subject to the
conditions set forth in the Purchase Agreement, after the closing of the WM Transactions, GFL will purchase certain equity interests
and assets from each of the Company (as owned by Waste Management after the WM Transactions, the “ADS Businesses”)
and Waste Management (the “WM Businesses”) for an aggregate purchase price of $835,000,000, subject to certain
post-closing adjustments (collectively with the other transactions contemplated by the Purchase Agreement, the “GFL Divestiture
Transaction”).
Consummation of the GFL Divestiture
Transaction is subject to customary closing conditions, including but not limited to: (i) the closing of the WM Transactions
and (ii) the absence of a material adverse effect on the ADS Businesses or WM Businesses taken as a whole. The GFL
Divestiture Transaction also remains subject to DOJ approval.
The Purchase Agreement contains customary
representations, warranties and covenants, including the agreement of the Company and Waste Management to operate each of their
applicable assets and businesses in the ordinary course during the period between the execution of the Purchase Agreement and the
closing of the GFL Divestiture Transaction, subject to certain exceptions, and with respect to obtaining approval of the GFL Divestiture
Transaction from the U.S. Department of Justice.
The Purchase Agreement contains specified
termination rights for the Company, Waste Management and GFL, including the right to terminate the Purchase Agreement, among others:
(i) in the event that the Merger Agreement has been validly terminated; (ii) if the GFL Divestiture Transaction has not been consummated
by December 4, 2020; and (iii) in the event of the issuance of a governmental order that prohibits the consummation of
the GFL Divestiture Transaction, including if the DOJ approval is not granted or the DOJ withdraws or retracts the DOJ consent
and informs the Company and Waste Management it will not re-grant the DOJ consent.