Dive Brief:

• GFL Environmental has acquired South Carolina-based Capital Waste Services, a portfolio company of private equity firm Kinderhook Industries.
• Capital’s assets includes four landfills, eight transfer stations and more than 200 collection vehicles, according to GFL CEO Patrick Dovigi. The company has locations in Georgia, South Carolina and Tennessee that provide residential, commercial and roll-off services to the broader region.
• Dovigi, speaking during GFL’s Q3 earnings call on Thursday, said the deal was attractive because it’s “right in the middle of our already dense Waste Industries footprint” and “exactly in the areas that we want to grow and the fast-growing markets in the U.S.”

Dive Insight:

While GFL has said it is largely focused on tuck-in acquisitions, in an effort to continue reducing its debt leverage after years of rapid growth through major transactions, executives described this deal as a unique opportunity. Sources indicate that CWS had been on the market for many months, and according to Dovigi it wasn’t initially going to work out in GFL’s favor.

“The reality is that the company that was selected as the higher bidder, it became very clear and apparent that they were going to have a longer time period to get through the [U.S. Department of Justice] and the shareholders were looking for certainty,” he said during the call. “Then they came back to us to acquire the business at a lower price with certainty around the DOJ process.”

Dovigi noted the transaction moved quickly because GFL had already done the necessary diligence and “knew the shareholders extremely well.” CWS Chief Operating Officer Brian Yorston is the brother of GFL COO Greg Yorston.

CWS is led by President and CEO Matt Parker, who previously worked as an area manager at Advanced Disposal Services.

Kinderhook acquired CWS in 2019 from Hawk Capital Partners, another private equity firm, and fueled a notable expansion of its footprint. Hawk initially formed CWS with the acquisition of Ard’s Sanitation — a Columbia, South Carolina, hauler — in 2015. Under Kinderhook, CWS went on to complete 10 acquisitions in multiple states. This included the 2021 purchase of certain assets that the DOJ required Republic Services to divest when it acquired Santek Waste Services. Capital’s most recent transaction was the March purchase of Sandlands C&D Landfill in South Carolina.

Kinderhook did not immediately respond to a request for comment prior to publication.

Canada-based GFL initially expanded in this market with the 2018 platform acquisition of Waste Industries. The company has densified its footprint in the region with multiple tuck-in purchases since then. So far this year, GFL has completed acquisitions worth $325 million (Canadian) in annualized revenue.

Looking ahead, Dovigi said the CWS assets have “meaningful runway and self-help opportunities to drive outsized organic growth and margin expansion in the near term.”