Stericycle Agrees to Sell Some of its Businesses to Complete MedServe Acquisition

Stericycle Inc. says it has agreed to a Department of Justice demand to sell off some of its medical waste collection businesses in four states to settle an antitrust lawsuit and finalize its $182.5 million acquisition of MedServe Inc.

DoJ's Antitrust Division said in a media release that the acquisition "as originally proposed, would substantially lessen competition in infectious waste collection and treatment services to hospitals and other critical healthcare facilities in Kansas, Missouri, Nebraska and Oklahoma, resulting in higher prices and reduced service."

The Antitrust Division and attorneys general in Missouri and Nebraska filed a civil antitrust lawsuit Monday in U.S. District Court in Washington, DC, to block the transaction. At the same time, DoJ and the two attorneys general filed a proposed settlement with Stericycle. If the settlement is approved by the court, it would resolve the competitive concerns alleged in the lawsuit.

"Without the divestitures required by the department, critical healthcare facilities in Kansas, Missouri, Nebraska, and Oklahoma would have faced higher prices," said Christine A. Varney, assistant attorney general in charge of the DoJ's Antitrust Division.

Stericycle announced that it had agreed to the government's demands, and said it expects to complete the MedServe acquisition by the end of December.

DoJ said Stericycle and MedServe are the only two firms competing for customers that generate large quantities of infectious waste in Kansas, Missouri, Nebraska, and Oklahoma. Under the proposed settlement, Stericycle and MedServe must divest all of MedServe's infectious waste collection and treatment services to large customers in Kansas, Missouri, Nebraska, and Oklahoma to a "viable purchaser" approved by DoJ. These assets include MedServe's Newton, KS, treatment facility, and its transfer stations in Kansas City, KS, Oklahoma City, Omaha, and Booneville, MO.

Lake Forest, IL-based Stericycle is the nation's largest provider of infectious waste collection and treatment services, with operations in nearly all of the contiguous 48 states. In 2008, its U.S. sales were $858 million. Bellaire, TX-based MedServe is the nation's second-largest provider of infectious waste collection and treatment services and operates in 25 states, with total revenues of $35.6 million in 2008.