TSX Commentary

Veritas : January 2010 Vigil – Company Profile on IESI-BFC Limited (BIN) – $17.09 – Snagged in the Sunshine State?
BUY, Intrinsic Value: $16.50 – $18.00
Via its acquisition of Waste Services Inc. (WSI), expected to close in Q1-10, IESI-BFC Limited (IESI or BIN) expanded its existing footprint in Canada and added a new integrated waste management platform in Florida. While the market overlap of IESI and WSI in Canada is expected to account for a majority of the US$25-US$30 million in net pre-tax annual synergies from the merger, Veritas believes the Florida market warrants attention due to its materiality, representing 49% of WSI’s last-twelve months (LTM) gross revenue. Overall, while the WSI transaction elevates BIN’s business risk profile because of the shaken Florida economy, the timing of the acquisition could be prudent given early indications of an improving WSI business in the US. Based on its DCF valuation of BIN, Veritas believes the current trading price of C$17.09 fully values the Company’s common shares. However, should management’s planned synergies of US$25-US$30 million be realized, and its excess free cash flow targets reached following planned closing in Q1-10, Veritas sees upside in BIN to C$18.00.