Republic to Spin Off Solid-Waste Division

MIAMI — Republic Industries Inc. said Wednesday that it will spin off its garbage-hauling division in a bid to jump-start the auto retailing giant’s low stock price and fuel Chairman Wayne Huizenga’s acquisitions campaign.

In a two-step transaction, Republic this summer will sell a 25% to 30% stake in its Republic Services Inc. solid-waste division in a public stock offering and in 1999 spin off the rest to Republic’s shareholders.

The initial public offering should raise $1.5 billion to $2 billion, which will be invested in its auto sales and rental businesses, Republic Industries said.

“This plan will enable our solid- waste business to operate as an independent company, while allowing Republic Industries to focus completely on its automotive retail and automotive rental businesses,” Huizenga said.

Republic Services is the fourth-largest solid-waste company in the United States, with revenue of $1.13 billion in 1997.

Since Huizenga bought into Republic in 1995, it has been acquiring companies at a rapid pace, including Alamo Rent a Car Inc. and scores of car dealerships, to build market share in a retailing sector with few leaders. The transactions were handled largely with Republic’s high-flying stock.

But bumps in the roll-out of Republic’s signature division, a no-haggle used-car chain called AutoNation, helped drive down Republic’s shares from the low $40s in early 1997 to the mid-$20s now. Republic has recently signaled AutoNation’s results were improving and the expanding chain was near break-even.

The stock slump crimped deal-making, even as Republic has continued to acquire car dealerships, analysts said.

Republic Industries co-Chief Executive Steve Berrard said the solid-waste unit will aggressively pursue acquisitions after the public offering. The new company will be backed by a $1-billion credit facility and a debt-free capital structure.

Republic Industries’ stock rose 50 cents to close at $27.13 on the New York Stock Exchange.