Gates investment arm trashes Waste Management bid

SAN FRANCISCO Fri Aug 1, 2008 8:27am BST

Microsoft Corp co-founder Bill Gates speaks during a news conference announcing joint efforts with New York City Mayor Michael Bloomberg to combat the global tobacco epidemic in New York, July 23, 2008. REUTERS/Shannon Stapleton

Microsoft Corp co-founder Bill Gates speaks during a news conference announcing joint efforts with New York City Mayor Michael Bloomberg to combat the global tobacco epidemic in New York, July 23, 2008.

Credit: Reuters/Shannon Stapleton

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SAN FRANCISCO (Reuters) - Bill Gates's investment arm has waded into a brewing takeover battle between Waste Management Inc WMI.N and Republic Services Inc (RSG.N), asking Waste Management to walk away.

Just over a month after he left Microsoft Corp (MSFT.O), Gates's BGI is lobbying the largest U.S. trash hauler to drop the unsolicited $6.2 billion bid it made this month for Republic, the third largest.

While his investment vehicles have stakes in dozens of companies, they have kept low profiles over the years and Gates has not traditionally been known as an activist investor.

But BGI didn't mince words in its letter to Waste Management's CEO and board, disclosed on Thursday.

"We can only assume your ill-timed and poorly conceived pursuit of Republic is designed to disrupt what you perceive as a competitive threat to your position in the market," wrote BGI.

"An acquisition of Republic will most certainly burden the company with excessive debt, distract your management, result in significant regulatory burdens, and thereby reduce shareholder value," it said.

"We encourage you to act with the best interests of your shareholders in mind, in a responsible and prudent manner, and to abandon this acquisition."

But Waste Management maintained that its bid for Republic was in the best interest of both companies and its stockholders.

"We have asked to meet with the head of BGI to discuss with him why we believe this to be the case, and hope to be given that opportunity soon," a company spokesman wrote in an e-mail.

Republic has already struck a deal to buy Allied Waste Industries Inc AW.N and rejected Waste Management's offer.

Cascade Investment LLC, Gates's investment vehicle, and Bill & Melinda Gates Foundation Trust LLC together own about 2.3 percent of Houston-based Waste Management, which has grown since the late 1960s into a trash hauler with more than 350 collection operations and 270 active landfill sites.

A call to a BGI spokesman late on Thursday was not immediately returned.

Gates on June 27 said a tearful goodbye to Microsoft to focus on his foundation, the world's largest charity.

The action by BGI follows efforts by fellow multibillionaire and activist investor Carl Icahn to influence a six-month takeover battle between Yahoo Inc (YHOO.O) and Microsoft.

(Editing by Braden Reddall and Andy Bruce)

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