Republic Services Inc. agreed to buy smaller waste management rival U.S. Ecology Inc. for $48 a share in cash, or roughly $1.5 billion.

The transaction will immediately add to adjusted earnings and free cash flow, Republic said in a statement. The Phoenix-based company said it expects about $40 million in cost synergies within three years.

Shares of US Ecology surged 68 percent to $47.25 at 9:30 a.m. in New York. Republic Services dropped 1.1 percent to $125.53.

US Ecology handles the disposal and recycling of non-hazardous and toxic waste for businesses and governments, according to its website. Republic Services is one of the top providers of waste management services in North America, according to its website, and competes with Waste Management Inc.

It’s the second-largest waste company in North America, according to Bloomberg Intelligence.

Waste companies could turn to mergers and acquisitions to boost growth, and offset industry challenges such as wage pressure and inflation costs, according to a Bloomberg Intelligence research note.