Waste Management ( WM ) has reached an agreement to acquire medical waste disposal company Stericycle ( SRCL ) in a deal valued at $7.2 billion including debt, sending the latter’s stock significantly higher Monday.

Waste Management will take on about $1.4 billion of Stericycle’s debt and pay $5.8 billion in cash at $62 per share, a 24% premium to its 60-day volume weighted average price as of May 23, the day before a Bloomberg report that Stericycle was considering a sale.

“As customers seek to manage a greater volume and variety of materials in a safe, responsible, and sustainable way, Stericycle’s knowledge and expertise in regulated medical waste and secure information destruction are compelling additions to WM’s broad portfolio of environmental solutions,” Stericycle Chief Executive Officer (CEO ) Cindy Miller said.

“We are proud of all that we’ve accomplished to shape a healthier and safer world and look forward to our future as part of WM.”

Waste Management Sees ‘More Than $125 Million’ in Annual Synergies

The acquisition will increase Waste Management’s capabilities in the medical waste sector, the companies said Monday, with the Houston-based WM projecting the deal will add “more than $125 million in annual run-rate synergies” and be accretive to its earnings and cash flow within a year of closing.

Pending regulatory approvals, the deal could close as soon as the fourth quarter of 2024.

Waste Management shares slipped 2.2% to $206.14 as of 10:10 a.m. ET Monday, while Stericycle shares jumped 15% to $59.26, their highest level in more than two years.