L.A.’s Biggest Trash Hauler to Be Acquired : Mergers: Houston’s Browning-Ferris plans to combine with Western Waste in a deal worth $520 million.

Western Waste Industries Inc. of Torrance, the largest trash-hauling company in Los Angeles County, said Thursday that it agreed to merge into the nation’s No. 2 waste management company, Browning-Ferris Industries Inc. of Houston.

The transaction--valued at $520 million--extends Browning-Ferris’ reach in Southern California beyond the commercial sector into residential waste services. BFI said it also hopes to capitalize on California’s stringent recycling efforts.

“This gives us a footing in Southern California,” said Browning-Ferris spokesman Peter G. Block. “The L.A. basin represented an important area for us, but we were still kind of nibbling at the edge.”

The agreement calls for BFI to exchange 1.02 shares of its stock for each share of Western stock. Details of the deal won’t be final for 30 days, and the merger will not be complete for another four to six months.

Western Waste stock, which plunged from a peak of $23.50 in 1991 to $8.75 earlier this year, gained $3 on Thursday on the takeover news to close at $20 in New York Stock Exchange trading. The stock had been rising since the firm disclosed it was in merger talks a week ago.

Shares of BFI fell $1.25 to close at $23.625 on the NYSE.

Under the terms of the agreement, Western Waste will continue operating as a subsidiary of BFI. Its president, Kosti Shirvanian--who drove the first hauling truck when he and his sister Savey Tufenkian started the company in 1957--will remain in his position and will join BFI’s board.

Western Waste, with $230 million in annual revenue in 1992, has trash-hauling contracts with 93 cities, with nearly two-thirds of its business in California. It also hauls trash in Texas, Florida, Louisiana, Colorado and Arkansas. The company, which employs 1,600 people, owns six landfills and has several more in development.

The company has courted controversy over the years, edging out BFI and other larger trash haulers in municipal contract negotiations.

Two years ago, competitors and some residents challenged Western Waste’s exclusive trash-collection contract with the city of Redondo Beach. Rival BFI threatened to sue the city but later backed down.

In its 1992 fiscal year, Western Waste’s profit fell 79% to $2.4 million, from $11.2 million the year before. Company officials attributed the drop to the closing of a division that manufactured truck bodies and write-offs on an acquisition that was not completed.

“Our strong relationships with our customers and our municipalities was very important to BFI,” said Richard F. Widrig, Western Waste’s vice president of finance and investor relations. “Over our lifetime, we’ve only lost a handful of our municipal contracts.”

BFI, with $3.2 billion in annual revenue last year, bought 45 regional trash haulers in its most recent fiscal year as part of an aggressive campaign to bolster its position against Waste Management Inc. of Oak Brook, Ill., the nation’s largest trash company.

“This is a very acquisition-minded company,” Block said. “No one escapes our overview.”

Some analysts, however, said BFI’s purchase price--twice Western Waste’s annual revenue--may have been too much.

“BFI is making a big bet that Southern California is going to be a strong market,” said Mark Matheson, senior analyst at Crowell, Weedon & Co. in Los Angeles. “But there will probably be some pruning at Western Waste. They’ll have to show the public that they will get some value and that they made a good deal.”