Apollo Global Management Inc. and BC Partners have reached an agreement to acquire a controlling interest in GFL Environmental Inc.’s environmental services division. The deal values the unit at C$8 billion (approximately US$5.6 billion), inclusive of debt. The transaction signals a significant move in the waste management sector and highlights the ongoing consolidation within the industry.
The consortium, comprised of Apollo and BC Partners, will secure a 56% stake in the business. GFL will retain the remaining 44% ownership and holds an option to repurchase the stake from the consortium within five years. The transaction is anticipated to finalize in the first quarter of the year. This structured approach allows GFL to potentially regain full control of the unit in the future.
This divestiture will provide GFL with approximately C$6.2 billion in cash proceeds. GFL intends to allocate up to C$3.75 billion towards debt reduction and as much as C$2.25 billion for share repurchases. This strategic use of capital aims to strengthen GFL’s financial position and enhance shareholder value.
GFL’s aggressive acquisition strategy in recent years has fueled its rapid growth, positioning it as a major player in the North American waste management landscape. However, the accompanying debt load has raised concerns among investors. This transaction directly addresses these concerns by significantly deleveraging GFL’s balance sheet.
“This transaction allows us to materially delever our balance sheet, accelerating our path to an investment-grade credit rating,” stated Patrick Dovigi, GFL’s founder and CEO. The debt repayment is projected to reduce GFL’s annual cash interest expense by roughly C$200 million. This improved financial outlook should bolster investor confidence in GFL’s long-term prospects.
GFL, headquartered in Vaughan, Ontario, offers a comprehensive suite of environmental services, including solid and liquid waste management and soil remediation, throughout Canada and the United States. With a workforce exceeding 20,000 employees, GFL’s operational scale is substantial. Notably, BC Partners previously invested in GFL in 2018, participating in a consortium that valued the company at C$5.1 billion, including debt.
GFL’s stock has performed well over the past year, appreciating 33% in New York and reaching a market capitalization of approximately $17 billion. The environmental services unit being divested generated around C$1.7 billion in revenue and over C$500 million in EBITDA last year. This robust financial performance underscores the unit’s inherent value.
This transaction follows BC Partners’ recent activity in the Canadian market, including the sale of GardaWorld, a security services firm, for approximately C$13.5 billion. The deal underscores the continued interest in Canadian assets from global private equity firms.
Brown Gibbons Lang & Co. and JPMorgan Chase & Co. acted as financial advisors to GFL on the transaction. Canaccord Genuity Corp. provided independent financial advice to the special committee of GFL’s board of directors. These advisors played a key role in facilitating this complex transaction. This strategic move by Apollo and BC Partners signifies their confidence in the long-term growth potential of the environmental services sector.
