Republic to Buy Large Southland Trash Company

Republic Industries Inc., a fast-growing conglomerate run by multibillionaire H. Wayne Huizenga, said Wednesday it is acquiring one of the California’s largest waste-management companies as part of an ambitious plan to expand its waste business throughout the West.

Taormina Industries Inc. has agreed to merge into Republic for about $250 million in stock. Brothers William and Vincent Taormina will receive 6.5 million shares and will operate the Anaheim company as a separate subsidiary.

Taormina, with 1 million curbside customers in seven cities and processing operations for three dozen municipalities in Southern California, will become the West Coast headquarters for Republic’s solid-waste disposal operations.

The transaction is the third announced in the last three days by Republic, which purchased two auto dealers for its nationwide superstore of new and used cars. It also has an electronic security business.

And the ambitious Huizenga is hardly through.

Taormina will be the “cornerstone” of Republic’s push to acquire waste-management operations throughout California and “in all the surrounding states,” said Michael Karsner, chief financial officer of the Fort Lauderdale, Fla.-based company. “Taormina has the management team and company culture and infrastructure to grow our business,” he added.

Currently, Republic “doesn’t have much” in solid waste operations west of Texas, Karsner said.

The acquisition is part of a continuing consolidation nationwide in the trash hauling and recycling business. Smaller operations are struggling with slimmer profit margins, tougher regulations and greater costs.

“If I hadn’t started out nearly 40 years ago, there’s no way I could go into business today,” said Tom Trulis, owner of Solag Disposal Inc., a small, family-run hauler in San Juan Capistrano that has contracts with six cities. “Sooner or later, we’ll become a vanishing breed.”

As more companies are gobbled up by the giants, he said, there will be less competition, prices will rise and cities and counties will have fewer choices.

The Taormina purchase marks Huizenga’s major move into California, which is “a great waste market,” said Stephen D. Weinress of investment banker L.H. Friend, Weinress, Frankson & Presson Inc. in Irvine.

With all the mergers and acquisitions, he said, “who knows who’s going to end up with the great desert landfills” that could hold the key to big profits.

The $100-million Taormina operation would boost Republic’s annual solid waste revenue to $800 million. The deal is expected to close by the end of the month, and more acquisitions are likely this year, Karsner said.

Typically, Huizenga has used Republic stock to make his acquisitions, and that worries some industry analysts.

“If people have the confidence to take paper with Huizenga, more power to him,” Weinress said. “He’s basically got his own currency.”

On Tuesday, Republic agreed to acquire Courtesy Auto Group in Orlando, Fla., for $30 million in stock, its eighth acquisition of a dealer group since late December. On Monday, it agreed to buy Wallace Automotive Group in southeast Florida for $55 million in stock.

Republic acquired Alamo Rent-A-Car in November and agreed last month to buy National Car Rental System. The price for both was about $3 billion in stock and assumed debt.

Despite the dizzying number of deals, Weinress said, Huizenga is known for buying solid companies with good market share and earnings.