HARTFORD, Conn. -- The trash talking has begun.

In a stinging letter Friday, garbage hauler Republic Services Inc. rejected an unsolicited $6.19 billion cash offer from larger rival Waste Management Inc., saying the proposal "seriously undervalues" its company.

Republic, the nation's third-largest waste collector, instead wants to stick with its own deal announced last month to buy No. 2 Allied Waste Industries Inc. The all-stock agreement was worth about $6.07 billion at the time.

"Republic is not for sale," James O'Connor, the company's chairman and CEO, wrote to David Steiner, CEO of Houston-based Waste Management, in a letter dated Friday.

The investment office that manages the assets of the Bill & Melinda Gates Foundation Trust also disagreed with the deal. BGI owns 15.6 percent of Republic and 2.3 percent of Waste Management.

The investment office also thinks the deal undervalues the target company and lacks strategic rationale and believes the regulatory process would be arduous and risky.

And it said Republic's shareholders would be best served by the proposed purchase of Allied.

Republic's O'Connor said the company's board was aware of its fiduciary duties and that Republic remained off the market because of its prior agreement to buy Allied.

Financial analyses presented to officials of Republic and Allied support a valuation "substantially above" $34 a share, he said. Waste Management's proposal was announced Monday.

Waste Management's offer Monday represented a 22 percent premium to Republic's closing stock price of $27.90 on July 11.

But as Republic's shares have climbed on the news this week, that premium has shrunk to 5 percent, based on the company's afternoon trading price of about $32.49 on Friday.

"In your press commentary, you referred to the Waste Management proposal as 'opportunistic,'" O'Connor wrote in his letter. "We believe that your proposal is opportunistic for you and that it will deny Republic stockholders the opportunity provided by the merger between Republic and Allied." Republic is based in Fort Lauderdale, Fla.

Waste Management said in a statement that it was mulling its next step, hinting that it might sweeten the deal.

"We are disappointed in the Republic Board of Directors' unwillingness to consider Waste Management's proposal," the company said, adding that its offer "could reasonably be expected to lead to a superior proposal."

Brian Butler, an analyst at FBR Capital Markets, said Republic's rejection of the Waste Management offer was expected.

"I think Waste Management knew it was not going to happen at $34," he said.

The choice for Republic to acquire Allied or be bought by Waste Management will come down to money, Butler said.

He said Waste Management might want to buy Republic because, as it said, it could save $150 million a year in boosting its size and improve its ownership of assets such as landfills.

Another possible reason is to block the Allied-Republic merger, Butler said.

O'Connor said that Waste Management's proposal would not prompt Republic officials to change their strategy "and we are concerned that it may be an effort by our largest competitor to disrupt our plans."

Allied said in a statement that the Waste Management proposal "does not constitute, and could not reasonably be expected to lead to, a transaction that is more favorable to Republic stockholders" than the agreement with Allied.

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