Accounting & Tax Considerations for Mergers & Acquisitions

In September, 1996, Allied Waste Industries, Inc. offered to pay $1.48 billion for the solid waste disposal operations of Laidlaw, Inc. Some industry analysts described the offer as something akin to a minnow swallowing a whale in that Laidlaw’s waste operations were about five times larger than those of Allied Waste. Analysts also questioned the ability of Allied Waste to put together the necessary financing for such a large transaction. Finally, some analysts speculated on the propriety of the offering price—of the $1.48 billion price tag, $900 million, or 61 percent, would represent goodwill to the buyer.