GFL Environmental Inc. Announces Agreement to Sell Environmental Services Business Valued at $8.0 Billion
GFL Environmental has announced an agreement to sell its Environmental Services business for an $8.0 billion enterprise value to Apollo Funds and BC Partners. The company will retain a 44% equity stake ($1.7 billion) in the business, with Apollo and BC each holding 28%. The transaction is expected to generate approximately $6.2 billion in net cash proceeds.
The company plans to use up to $3.75 billion to repay debt and allocate up to $2.25 billion for share repurchases. This strategic move is expected to reduce Net Leverage to 3.0x and decrease annualized cash interest by about $200 million. GFL will maintain an option to repurchase the Environmental Services business within five years of closing.
The transaction, expected to close in Q1 2025, was unanimously approved by GFL's board and received a fairness opinion from Canaccord Genuity Corp.
GFL Environmental ha annunciato un accordo per vendere la sua attività di Servizi Ambientali per un valore d'impresa di 8,0 miliardi di dollari a Apollo Funds e BC Partners. La società manterrà una partecipazione azionaria del 44% (1,7 miliardi di dollari) nell'attività, con Apollo e BC che ciascuno detiene il 28%. Si prevede che la transazione genererà circa 6,2 miliardi di dollari in proventi netti.
La società prevede di utilizzare fino a 3,75 miliardi di dollari per rimborsare debiti e destinare fino a 2,25 miliardi di dollari per riacquisti di azioni. Questa mossa strategica dovrebbe ridurre il Leverage Netto a 3,0x e diminuire gli interessi in contante annualizzati di circa 200 milioni di dollari. GFL manterrà un'opzione per riacquistare l'attività di Servizi Ambientali entro cinque anni dalla chiusura.
La transazione, prevista per chiudere nel primo trimestre del 2025, è stata approvata all'unanimità dal consiglio di amministrazione di GFL e ha ricevuto un parere di equità da Canaccord Genuity Corp.
GFL Environmental ha anunciado un acuerdo para vender su negocio de Servicios Ambientales por un valor empresarial de 8,0 mil millones de dólares a Apollo Funds y BC Partners. La empresa mantendrá una participación del 44% (1,7 mil millones de dólares) en el negocio, con Apollo y BC manteniendo cada uno el 28%. Se espera que la transacción genere aproximadamente 6,2 mil millones de dólares en ingresos netos.
La empresa planea utilizar hasta 3,75 mil millones de dólares para pagar deudas y destinar hasta 2,25 mil millones de dólares para recompras de acciones. Este movimiento estratégico se espera que reduzca el Apalancamiento Neto a 3,0x y disminuya los intereses en efectivo anualizados en aproximadamente 200 millones de dólares. GFL mantendrá una opción para recomprar el negocio de Servicios Ambientales dentro de cinco años después del cierre.
Se espera que la transacción se cierre en el primer trimestre de 2025, fue aprobada unánimemente por la junta de GFL y recibió un informe de equidad de Canaccord Genuity Corp.
GFL 환경이 아폴로 펀드와 BC 파트너스에 자산 가치 80억 달러에 환경 서비스 사업을 판매하기로 합의했습니다. 회사는 이 사업에 대해 44%의 지분(17억 달러)을 유지하며, 아폴로와 BC는 각각 28%를 보유합니다. 이번 거래는 약 62억 달러의 순현금 수익을 창출할 것으로 예상됩니다.
회사는 최대 37억 5천만 달러를 부채 상환에 사용하고 최대 22억 5천만 달러를 자사주 매입에 배정할 계획입니다. 이러한 전략적인 조치는 순 레버리지를 3.0배로 낮추고 연간 현금 이자를 약 2억 달러 감소시키는 효과를 볼 것으로 예상됩니다. GFL은 거래가 종료된 후 5년 이내에 환경 서비스 사업을 재매입할 수 있는 옵션을 유지합니다.
이번 거래는 2025년 1분기에 마무리될 예정이며, GFL 이사회에 의해 만장일치로 승인되었고, Canaccord Genuity Corp.의 공정성 의견을 받았습니다.
GFL Environmental a annoncé un accord pour vendre son activité de Services Environnementaux pour une valeur d'entreprise de 8,0 milliards de dollars aux Apollo Funds et BC Partners. L'entreprise conservera une participation de 44% (1,7 milliard de dollars) dans l'activité, Apollo et BC détenant chacun 28%. La transaction devrait générer environ 6,2 milliards de dollars de recettes nettes.
L'entreprise prévoit d'utiliser jusqu'à 3,75 milliards de dollars pour rembourser des dettes et d'allouer jusqu'à 2,25 milliards de dollars pour des rachats d'actions. Ce mouvement stratégique devrait réduire le ratio d'endettement net à 3,0x et diminuer les intérêts en espèces annualisés d'environ 200 millions de dollars. GFL conservera une option de racheter l'activité de Services Environnementaux dans les cinq ans suivant la clôture.
La transaction, qui devrait être finalisée au premier trimestre 2025, a été approuvée à l'unanimité par le conseil d'administration de GFL et a reçu un avis d'équité de Canaccord Genuity Corp.
GFL Environmental hat eine Vereinbarung zur Veräußertung seines Geschäftsbereichs Umweltservices für einen Unternehmenswert von 8,0 Milliarden Dollar an Apollo Funds und BC Partners bekannt gegeben. Das Unternehmen behält einen Eigenkapitalanteil von 44% (1,7 Milliarden Dollar) an dem Geschäft, wobei Apollo und BC jeweils 28% halten. Es wird erwartet, dass die Transaktion rund 6,2 Milliarden Dollar an Nettobarerlösen generiert.
Das Unternehmen plant, bis zu 3,75 Milliarden Dollar zur Tilgung von Schulden und bis zu 2,25 Milliarden Dollar für Aktienrückkäufe zu verwenden. Dieser strategische Schritt soll die Netto-Verschuldung auf 3,0x senken und die jährlichen Barausgaben für Zinsen um etwa 200 Millionen Dollar reduzieren. GFL wird das Recht behalten, das Geschäft mit Umweltservices innerhalb von fünf Jahren nach Abschluss zurückzukaufen.
Die Transaktion, die im ersten Quartal 2025 abgeschlossen werden soll, wurde einstimmig vom Vorstand von GFL genehmigt und erhielt eine Fairness-Meinung von Canaccord Genuity Corp.
- Sale price of $8.0 billion significantly exceeds management expectations
- Debt reduction of up to $3.75 billion improves financial flexibility
- Reduces annual cash interest expenses by $200 million
- Maintains 44% equity stake worth $1.7 billion with future upside potential
- Option to repurchase the business within 5 years
- Up to $2.25 billion allocated for share repurchases
- Divestment of significant business segment reduces operational scale
- Transaction subject to closing conditions and regulatory approvals
Insights
$8.0 billion - Proceeds to be used to repay up to
$3.75 billion $2.25 billion - Transaction allows GFL to roll
$1.7 billion - Pro forma Net Leverage1 of 3.0x creates greater financial flexibility and accelerates path to investment grade
- Reduces annualized cash interest by approximately
$200 million - Maintains synergies between Environmental Services and Solid Waste businesses
GFL intends to use up to
"The sale of our Environmental Services business at an enterprise value of
Mr. Dovigi continued, "The transaction allows us to monetize the Environmental Services business in a tax efficient manner while retaining an equity interest that will allow us to participate in what we expect to be continued value creation from these high-quality assets. In addition, GFL will maintain an option, not an obligation, to repurchase the Environmental Services business within five years of closing."
"The repayment of debt is expected to reduce our annualized cash interest expense by approximately
Mr. Dovigi concluded, "After a long, robust and highly competitive process, we are excited to have selected the Apollo Funds and BC Funds to partner with on this transaction. We have a long-standing relationship with BC Partners, to whom we have delivered significant returns on their capital. We also look forward to working with Apollo, a leading alternative asset manager, with deep expertise and a demonstrated track record of value creation for its stakeholders."
Craig Horton, Partner at Apollo, said, "GFL Environmental Services is a leading North American provider of increasingly essential industrial and waste management services, with a broad customer base and exposure to attractive and growing end markets. We believe this transaction will provide the Environmental Services business with greater flexibility to pursue organic and inorganic growth opportunities as an independent business, while also taking advantage of the strategic, value-added resources and structuring capability of the Apollo platform. This is a great example of partnership capital from the Apollo Funds, including our Hybrid Value and Infrastructure strategies, and we look forward to working with the talented management team as well as GFL and BC Partners to accelerate growth and drive value creation."
Paolo Notarnicola, Partner and Co-Head of Services at BC Partners added, "Our long and successful relationship with Patrick and the GFL team underlines BC Partners' true partnership approach, supporting entrepreneurial leaders at high-growth businesses in defensive sectors to scale and grow. Under Patrick's leadership we have seen GFL's Environmental Services business grow from a small franchise in
Pursuant to the Transaction Agreement, GFL will retain a
GFL's board of directors (interested directors having recused themselves) unanimously approved the Transaction upon the recommendation of a special committee comprised solely of independent and disinterested directors (the "Special Committee"). In arriving at its unanimous recommendation that the Transaction is in the best interests of the Company, the Special Committee considered several factors, including among other things, a fairness opinion delivered to it by its independent financial advisor, Canaccord Genuity Corp., that the consideration to be received under the Transaction is fair to the Company from a financial point of view.
Brown, Gibbons, Lang & Company Securities, Inc. and J.P. Morgan Securities LLC served as financial advisors and Latham & Watkins LLP and Stikeman Elliott LLP served as legal counsel to GFL in connection with the Transaction. Canaccord Genuity Corp. served as independent financial advisor and Cassels Brock & Blackwell LLP served as legal counsel to the Special Committee in connection with the Transaction.
In connection with the Transaction, Sidley Austin LLP served as legal counsel to the Apollo Funds in
Further details regarding the Transaction are set out in the Transaction Agreement which will be made available on the Company's profile on EDGAR at www.sec.gov and SEDAR+ at www.sedarplus.ca. The description of the Transaction in this press release is a summary only and is qualified in its entirety by the terms of the Transaction Agreement.
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(1) | A non-IFRS measure; see "Non-IFRS Measures" for an explanation of the composition of non-IFRS measures. Due to the uncertainty of the likelihood, amount and timing of effects of events or circumstances to be excluded from these measures, GFL does not have information available to provide a quantitative reconciliation of such projections to comparable IFRS measures. |
Conference Call
The Company will hold a conference call to discuss the Transaction on January 7, 2025 at 8:30 am Eastern Time. A live audio webcast of the conference call can be accessed by logging onto the Company's Investors page at investors.gflenv.com or by clicking here or listeners may access the call toll-free by dialing 1-833-950-0062 in
The Company encourages participants who will be dialing in to pre-register for the conference call using the following link: https://www.netroadshow.com/events/login?show=11c9d06b&confId=76038. Callers who pre-register will be given a conference access code and PIN to gain immediate access to the call and bypass the live operator on the day of the call. A copy of the presentation for the call will be available at investors.gflenv.com.
About GFL
GFL, headquartered in
About Apollo
Apollo is a high-growth, global alternative asset manager. In our asset management business, we seek to provide our clients excess return at every point along the risk-reward spectrum from investment grade credit to private equity. For more than three decades, our investing expertise across our fully integrated platform has served the financial return needs of our clients and provided businesses with innovative capital solutions for growth. Through Athene, our retirement services business, we specialize in helping clients achieve financial security by providing a suite of retirement savings products and acting as a solutions provider to institutions. Our patient, creative, and knowledgeable approach to investing aligns our clients, businesses we invest in, our employees, and the communities we impact, to expand opportunity and achieve positive outcomes. As of September 30, 2024, Apollo had approximately USD
About BC Partners
BC Partners is a leading investment firm with over
Forward-Looking Statements
This release includes certain "forward-looking statements" and "forward-looking information" (collectively, "forward-looking information"), within the meaning of applicable
Forward-looking information is based on our opinions, estimates and assumptions that we considered appropriate and reasonable as of the date such information is stated, is subject to known and unknown risks, uncertainties, assumptions and other important factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward- looking information, including but not limited to certain assumptions set out herein; our ability to obtain and maintain existing financing on acceptable terms; our ability to source and execute on acquisitions on terms acceptable to us; our ability to find purchasers for and complete any divestiture of assets on terms acceptable to us; our ability to use the proceeds of any such asset divestiture for deleveraging or potential share repurchases; currency exchange and interest rates; commodity price fluctuations; our ability to implement price increases and surcharges; changes in waste volumes; labour, supply chain and transportation constraints; inflationary cost pressures; fuel supply and fuel price fluctuations; our ability to maintain a favourable working capital position; the impact of competition; the changes and trends in our industry or the global economy; and changes in laws, rules, regulations, and global standards. Other important factors that could materially affect our forward-looking information can be found in the "Risk Factors" section of GFL's annual information form for the year ended December 31, 2023 and GFL's other periodic filings with the
Non-IFRS Measures
This release makes reference to certain non-IFRS measures. These measures are not recognized measures under IFRS and do not have a standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other companies. Accordingly, these measures should not be considered in isolation nor as a substitute for analysis of our financial information reported under IFRS. Rather, these non-IFRS measures are used to provide investors with supplemental measures of our operating performance and thus highlight trends in our core business that may not otherwise be apparent when relying solely on IFRS measures. We also believe that securities analysts, investors and other interested parties frequently use non-IFRS measures in the evaluation of issuers. Our management also uses non-IFRS measures in order to facilitate operating performance comparisons from period to period, to prepare annual operating budgets and forecasts and to determine components of management compensation. Due to the uncertainty of the likelihood, amount and timing of effects of events or circumstances to be excluded from these measures, GFL does not have information available to provide a quantitative reconciliation of such projections to comparable IFRS measures.
EBITDA represents, for the applicable period, net income (loss) plus (a) interest and other finance costs, plus (b) depreciation and amortization of property and equipment, landfill assets and intangible assets, plus (less) (c) the provision (recovery) for income taxes, in each case to the extent deducted or added to/from net income (loss). We present EBITDA to assist readers in understanding the mathematical development of Adjusted EBITDA. Management does not use EBITDA as a financial performance metric.
Adjusted EBITDA is a supplemental measure used by management and other users of our financial statements including, our lenders and investors, to assess the financial performance of our business without regard to financing methods or capital structure. Adjusted EBITDA is also a key metric that management uses prior to execution of any strategic investing or financing opportunity. For example, management uses Adjusted EBITDA as a measure in determining the value of acquisitions, expansion opportunities, and dispositions. In addition, Adjusted EBITDA is utilized by financial institutions to measure borrowing capacity. Adjusted EBITDA is calculated by adding and deducting, as applicable from EBITDA, certain expenses, costs, charges or benefits incurred in such period which in management's view are either not indicative of underlying business performance or impact the ability to assess the operating performance of our business, including: (a) (gain) loss on foreign exchange, (b) (gain) loss on sale of property and equipment, (c) mark-to-market (gain) loss on Purchase Contracts, (d) share of net (income) loss of investments accounted for using the equity method for associates, (e) share-based payments, (f) (gain) loss on divestiture, (g) transaction costs, (h) acquisition, rebranding and other integration costs (included in cost of sales related to acquisition activity), (i) Founder/CEO remuneration and (j) other. For the three and nine months ended September 30, 2024, Founder/CEO remuneration has been added back to EBITDA. We use Adjusted EBITDA to facilitate a comparison of our operating performance on a consistent basis reflecting factors and trends affecting our business. As we continue to grow our business, we may be faced with new events or circumstances that are not indicative of our underlying business performance or that impact the ability to assess our operating performance.
Acquisition EBITDA represents, for the applicable period, management's estimates of the annual Adjusted EBITDA of an acquired business, based on its most recently available historical financial information at the time of acquisition, as adjusted to give effect to (a) the elimination of expenses related to the prior owners and certain other costs and expenses that are not indicative of the underlying business performance, if any, as if such business had been acquired on the first day of such period and (b) contract and acquisition annualization for contracts entered into and acquisitions completed by such acquired business prior to our acquisition (collectively, "Acquisition EBITDA Adjustments"). Further adjustments are made to such annual Adjusted EBITDA to reflect estimated operating cost savings and synergies, if any, anticipated to be realized upon acquisition and integration of the business into our operations. Acquisition EBITDA is calculated net of divestitures. We use Acquisition EBITDA for the acquired businesses to adjust our Adjusted EBITDA to include a proportional amount of the Acquisition EBITDA of the acquired businesses based upon the respective number of months of operation for such period prior to the date of our acquisition of each such business.
Adjusted Cash Flows from Operating Activities represents cash flows from operating activities adjusted for (a) transaction costs, (b) acquisition, rebranding and other integration costs, (c) Founder/CEO remuneration, (d) cash interest paid on TEUs, (e) cash taxes related to divestitures and (f) distribution received from joint ventures. Adjusted Cash Flows from Operating Activities is a supplemental measure used by investors as a valuation and liquidity measure in our industry. For the three and nine months ended September 30, 2024, Founder/CEO remuneration and distributions received from joint ventures have been added back to Adjusted Cash Flows from Operating Activities. These amounts were not paid or received, as applicable, in prior periods. Adjusted Cash Flows from Operating Activities is a supplemental measure used by management to evaluate and monitor liquidity and the ongoing financial performance of GFL.
Adjusted Free Cash Flow represents Adjusted Cash Flows from Operating Activities adjusted for (a) proceeds on disposal of assets and other, (b) purchase of property and equipment and (c) incremental growth investments. Adjusted Free Cash Flow is a supplemental measure used by investors as a valuation and liquidity measure in our industry. Adjusted Free Cash Flow is a supplemental measure used by management to evaluate and monitor liquidity and the ongoing financial performance of GFL. For the three and nine months ended September 30, 2024, we excluded investment in joint ventures and associates from the calculation of Adjusted Free Cash Flow.
Net Leverage is a supplemental measure used by management to evaluate borrowing capacity and capital allocation strategies. Net Leverage is equal to our total long-term debt, as adjusted for fair value, deferred financings and other adjustments and reduced by our cash, divided by Run-Rate EBITDA.
Run-Rate EBITDA represents Adjusted EBITDA for the applicable period as adjusted to give effect to management's estimates of (a) Acquisition EBITDA Adjustments (as defined above) and (b) the impact of annualization of certain new municipal and disposal contracts and cost savings initiatives, entered into, commenced or implemented, as applicable, in such period, as if such contracts or costs savings initiatives had been entered into, commenced or implemented, as applicable, on the first day of such period ((a) and (b), collectively, "Run-Rate EBITDA Adjustments"). Run-Rate EBITDA has not been adjusted to take into account the impact of the cancellation of contracts and cost increases associated with these contracts. These adjustments reflect monthly allocations of Acquisition EBITDA for the acquired businesses based on straight line proration. As a result, these estimates do not take into account the seasonality of a particular acquired business. While we do not believe the seasonality of any one acquired business is material when aggregated with other acquired businesses, the estimates may result in a higher or lower adjustment to our Run-Rate EBITDA than would have resulted had we adjusted for the actual results of each of the acquired businesses for the period prior to our acquisition. We primarily use Run-Rate EBITDA to show how GFL would have performed if each of the acquired businesses had been consummated at the start of the period as well as to show the impact of the annualization of certain new municipal and disposal contracts and cost savings initiatives. We also believe that Run-Rate EBITDA is useful to investors and creditors to monitor and evaluate our borrowing capacity and compliance with certain of our debt covenants. Run-Rate EBITDA as presented herein is calculated in accordance with the terms of our revolving credit agreement.
All references to "$" in this press release are to Canadian dollars, unless otherwise noted.
For more information:
Patrick Dovigi
+1 905-326-0101
pdovigi@gflenv.com
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SOURCE GFL Environmental Inc.
FAQ
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