Acquisitions and Divestitures

12 Months Ended

Dec. 31, 2024

Acquisitions and Divestitures

Acquisitions and Divestitures

17.  Acquisitions and Divestitures

Acquisitions

Stericycle Acquisition

On June 3, 2024, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) to acquire all outstanding shares of Stericycle for $62.00 per share in cash, representing a total enterprise value of approximately $7.2 billion (net of cash acquired) when including the assumption of $0.5 billion of debt and the repayment of approximately $0.8 billion of net debt. The acquisition expands our offerings in the U.S., Canada and parts of Western Europe by providing RWCS and SID services that protect people and brands, promote health and well-being and safeguard the environment. The transaction closed on November 4, 2024 and was funded using borrowings under our Term Credit Agreement, commercial paper program and available cash on hand. Shortly thereafter, we repaid all outstanding borrowings under our Term Credit Agreement with net proceeds from our November 2024 issuance of $5.2 billion of senior notes.

We incurred acquisition and integration related costs of approximately $160 million, which were primarily classified as “Selling, general and administrative expenses.” The post-closing operating results of Stericycle have been included in our consolidated financial statements, within our new reportable WM Healthcare Solutions segment. Post-closing through December 31, 2024, Stericycle recognized $403 million, $244 million and $155 million of operating revenue, operating expenses and selling, general and administrative expenses, respectively, which are net of intercompany transactions and included in our Consolidated Statements of Operations.

Our consolidated financial statements have not been retroactively restated to include Stericycle’s historical financial position or results of operations. The acquisition is accounted for as a business combination. In accordance with the purchase method of accounting, the purchase price paid has been allocated to the assets and liabilities acquired based upon their estimated fair values as of the acquisition date, with the excess of the purchase price over the net assets acquired recorded as goodwill. We are in the process of valuing all of the assets and liabilities acquired in the acquisition, and, until we have completed our valuation process, there may be adjustments to our estimates of fair value and resulting preliminary purchase price allocation.

We used the following valuation techniques for the following significant accounts in which carrying value did not approximate fair value: (i) property and equipment were valued primarily using the cost approach with significant assumptions including replacement cost, trend indices, and normal useful lives; (ii) customer relationship assets were valued using the multi-period excess earnings method with significant assumptions including projected revenue, attrition rate, operating expense, selling and general administrative expenses, and discount rate; (iii) indefinite trade name assets were valued using the relief from royalty method with significant assumptions including revenue attributable to the trade names and royalty rates and (iv) permit assets were valued using the cost to recreate method with significant assumptions including costs required to obtain the permits and the opportunity costs if the permits were not in place on the acquisition date.

The fair values for property and equipment and intangibles were based on significant inputs that are not observable in the market and thus represent a Level 3 measurement in the fair value hierarchy. The WM Notes were valued using observable market prices which represent a Level 1 measurement in the fair value hierarchy.

Our estimates and assumptions are subject to change during the measurement period, not to exceed one year from the acquisition date. The areas of acquisition accounting that are not yet finalized primarily relate to (i) finalizing the review and valuation of trade names, permits, customer relationships, and certain property plant and equipment and other intangibles (including the models, key assumptions, estimates and inputs used) and assignment of remaining useful lives associated with the depreciable and amortizable assets and (ii) finalizing the review and valuation of accounts receivable, accrued expenses, contingent liabilities, deferred taxes and goodwill (including key assumptions, inputs and estimates).

Goodwill of $3.6 billion was calculated as the excess of the consideration paid over the net assets recognized and represents the future economic benefits expected to arise from other assets acquired that could not be individually identified and separately recognized and from synergies of the combination. All of the goodwill was provisionally assigned to the WM Healthcare Solutions segment. We have not yet completed the assignment of goodwill to our reporting units as of December 31, 2024. Substantially all of the goodwill is not deductible for income tax purposes.

The following table shows the preliminary purchase price allocation (in millions):

		November 4, 2024
Cash and cash equivalents	$	198
Accounts and other receivables (a)		506
Parts and supplies		19
Other current assets		64
Assets held for sale (b)		125
Property and equipment		782
Goodwill		3,633
Other intangible assets		3,536
Other assets		619
Accounts payable		(186)
Accrued liabilities		(336)
Deferred revenues		(77)
Current portion of long-term debt		(5)
Liabilities held for sale (b)		(35)
Long-term debt, less current portion		(510)
Deferred income taxes		(884)
Other liabilities		(542)
Total purchase price	$	6,907

(a) Includes allowance for doubtful accounts of $130 million. See Note 2 for further discussion.

(b) Includes Stericycle’s Spain and Portugal subsidiaries. See “Assets Held for Sale” under 2024 Divestitures for additional information.

The preliminary allocation of $3,536 million for other intangible assets includes $2,279 million for customer relationships with a weighted average amortization period of 15 years, $630 million for indefinite lived trade names, $319 million for indefinite lived permits, $162 million for definite lived trade names with a weighted average amortization period of 2.2 years, $141 million for ERP software with a weighted average amortization period of 4.7 years, and $5 million for developed technology with an amortization period of 17 years.

The unaudited pro forma financial information in the table below summarizes the combined results of operations for Waste Management and Stericycle as though the companies had been combined as of January 1, 2023. Examples of adjustments made to arrive at the pro forma amounts include, but are not limited to, the following:

•Transaction expenses incurred by us and Stericycle;

•Elimination of revenue and expenses between us and Stericycle;

•Adjustments to depreciation and amortization expense due to step-up in fair value of the acquired assets;

•Interest expense adjustments;

•Accounting policy alignment adjustments; and

•Income tax adjustments.

The following unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved as if the acquisition had taken place as January 1, 2023 for the year ended December 31 (in millions):

	2024		2023
Operating revenues	$	24,258	$	23,066
Net income attributable to Waste Management, Inc.		2,614		1,843

Other 2024 Acquisitions

In addition to Stericycle, during the year ended December 31, 2024, we completed solid waste and recycling acquisitions primarily in New York, Florida, North Carolina and Arizona for total consideration of $790 million. Total consideration included $783 million in net cash paid and $7 million in non-cash consideration, primarily related to purchase price holdbacks. In addition, we paid $23 million of holdbacks, of which $16 million related to prior year acquisitions.

Total consideration for our other 2024 acquisitions was primarily allocated to $160 million of property and equipment, $79 million of other intangible assets and $588 million of goodwill. Other intangible assets included $63 million of customer relationships and $14 million of covenants not-to-compete.

The goodwill related to our other 2024 acquisitions was primarily a result of expected synergies from combining the acquired businesses with our existing operations a significant portion of which was tax deductible.

In 2022, we acquired a controlling interest in a business engaged in accelerating film and plastic wrap recycling capabilities that is included in our Recycling Processing and Sales segment. In the fourth quarter of 2024, we acquired the remaining minority interests in this business for $41 million.

2023 Acquisitions

During the year ended December 31, 2023, we acquired 12 businesses, primarily related to our Collection and Disposal businesses. Total consideration, net of cash acquired, for all acquisitions was $182 million, which included $157 million in net cash paid and $25 million in non-cash consideration, primarily related to purchase price holdbacks. In addition, we paid $13 million of holdbacks, of which $6 million related to prior year acquisitions.

Total consideration for our 2023 acquisitions was primarily allocated to $49 million of property and equipment, $44 million of other intangible assets and $88 million of goodwill. Other intangible assets included $34 million of customer relationships and $10 million of covenants not-to-compete.

The goodwill related to our 2023 acquisitions was primarily a result of expected synergies from combining the acquired businesses with our existing operations and substantially all was tax deductible.

2022 Acquisitions

During the year ended December 31, 2022, we acquired 13 businesses, including the acquisition of a controlling interest in a business intended to allow us to deliver new recycling capabilities for our customers and provide circular solutions for film and clear plastic wrap used commercially, such as plastic stretch wrap for pallets, furniture film, grocery bags and potentially shrink wrap around food and beverage containers. Our other acquisitions in 2022 primarily related to our Collection and Disposal businesses. Total consideration, net of cash acquired, for all acquisitions was $507 million, which included $372 million in net cash paid and $135 million in non-cash consideration, primarily related to purchase

price holdbacks and the conversion of $67 million in secured convertible promissory notes receivable into equity of the acquired business. In addition, we paid $5 million of holdbacks related to prior year acquisitions.

Total consideration for our 2022 acquisitions was primarily allocated to $138 million of property and equipment, $64 million of other intangible assets, $325 million of goodwill and $14 million of noncontrolling interests. Other intangible assets included $45 million of customer relationships and $19 million of covenants not-to-compete.

Divestitures

Assets Held for Sale

Upon our acquisition of Stericycle in November 2024, WM Healthcare Solutions’ Spain and Portugal subsidiaries were classified as held for sale and included within the “Assets held for sale” and “Liabilities held for sale” line items in the preliminary allocation of purchase price. We completed the sale of these assets on January 2, 2025.

2024 Divestitures

Proceeds from divestitures of businesses and other assets, net of cash divested, were $158 million, $78 million and $27 million in 2024, 2023 and 2022, respectively primarily the result of the sale of certain non-strategic assets.