Disposal company Republic Services said Monday it will buy Allied Waste Industries in a $6.07 billion stock deal that would join the second- and third-largest players in the disposal industry.

Republic Services will pay Allied Waste shareholders .45 worth of a Republic share for each share held, valued at $14.04 per share based on Republic's Friday closing stock price of $31.19.

Based on the nearly 432.5 million Allied shares outstanding at April 24, the deal is worth $6.07 billion and represents a nearly 4% premium to Allied's closing stock price Friday.

Shareholders of Phoenix-based Allied Waste will own 52% of the combined company, which will be led by Republic Chairman and Chief Executive James E. O'Connor. Allied's Don Slager will become president and chief operating officer.

"By combining the strengths of two great companies and integrating executives from both teams, Republic will enhance its leadership position in the U.S. environmental services industry, building on both companies' foundations of profitable growth," said O'Connor.

The companies announced June 14 that they were in merger talks, valued then at about $15.23 per share, or $6.59 billion. The news sent shares of both firms down about 5% and the stocks have since slipped further.

In a statement Monday, Republic Services said the combined company will have annual revenue of about $9 billion and a total market capitalization of about $12 billion. More than 35,000 employees will serve over 13 million customers in 40 states and Puerto Rico.

The transaction is expected to close by the fourth quarter, and add to Republic's earnings per share in the first year after closing.