Major Deal Unfolds in Waste Management Industry
A significant development has taken place in the waste management sector, as Apollo Global Management Inc. and BC Partners have agreed to acquire a majority stake in GFL Environmental Inc.’s environmental services unit. This deal values the business at a substantial C$8 billion ($5.6 billion), including debt.
GFL to Retain Stake and Option to Repurchase
As part of the agreement, the consortium will purchase a 56% stake in the business, while GFL will retain the remaining 44% with an option to repurchase from Apollo and BC Partners within the next five years. This transaction is expected to be finalized in the first quarter of the year.
Cash Proceeds to Fuel Debt Repayment and Share Repurchases
The sale of the stake will generate approximately C$6.2 billion in cash proceeds for GFL, which plans to allocate up to C$3.75 billion towards debt repayment and up to C$2.25 billion for share repurchases. This move is expected to significantly reduce the company’s debt burden and accelerate its path to achieving an investment-grade credit rating.
GFL’s Rapid Expansion and Debt Concerns
In recent years, GFL has emerged as one of North America’s largest waste management companies, driven by a series of strategic acquisitions. However, the debt incurred to finance this growth has raised concerns among investors, prompting the company to explore divestment opportunities for its less profitable businesses.
Environmental Services Unit Performance
The environmental services unit, which is the subject of the deal, generated revenue of approximately C$1.7 billion last year and earnings before interest, taxes, depreciation, and amortization (EBITDA) of over C$500 million.
GFL’s Market Value and BC Partners’ Canadian Presence
Shares of GFL have risen 33% over the past year, giving the company a market value of around $17 billion. BC Partners has been actively investing in Canada, having agreed to sell GardaWorld last year in a deal valuing the security services firm at about C$13.5 billion.
Advisors Involved in the Deal
Brown Gibbons Lang & Co. and JPMorgan Chase & Co. advised GFL on the deal, while Canaccord Genuity Corp. served as independent financial advisor to the special committee of GFL directors.
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