Thursday, January 29, 2009

Bill Gates Likes The Smell Of Trash

It looks like Bill Gates is folding up his sleeves and moving into trash.

Gates’ Cascade Investment took an 11.6% stake in Republic Services, according to a filing with the U.S. Securities and Exchange Commission. Gates' private investment fund bought 3.9 million shares of Republic from Jan. 13 through Jan. 26 for $448.6 million

With a market capitalization of $4.8 billion, Republic and its larger rival, the $15.7 billion Waste Management now control the U.S. trash sector. Republic just completed a $6.1 billion, all-stock buyout of former rival, Allied Waste Industries. Before the deal, Gates owned 20.0% of Republic, so he’s not new to the investment.

The founder of Microsoft is also no stranger to companies with strangleholds on their markets.

Hoffman said the Republic and Waste Management own 573 of America's 600 landfills, meaning they can sustain – and raise – prices without losing business. “If you control the ultimate disposal, you can’t gouge the marketplace but you can raise prices above inflation,” he said.

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