UPDATE: Nov. 15, 2018: GFL Environmental has officially closed the $2.825 billion acquisition of Waste Industries, making it "the largest private environmental services company in North America."
The deal was financed by equity investment from current GFL investors BC Partners and Ontario Teachers' Pension Plan; GFL shareholders, including CEO Patrick Dovigi; Waste Industries investors, including HPS Investment partners and the Poole family; and additional debt financing.
According to GFL, this deal now grows its footprint to 20 U.S. states and every Canadian province except Prince Edward Island. As first reported by Waste Dive, the company's U.S. presence was also expanded by the recent acquisition of Illinois-based liquid waste company Future Environmental.
Dive Brief:
- GFL Environmental and Waste Industries have announced plans for a merger that will create the largest privately held environmental services company in North America. The deal, the largest of 2018 so far, values Waste Industries at $2.825 billion and is expected to close in the fourth quarter of this year pending regulatory approval.
- Patrick Dovigi, founder and CEO of GFL, will remain CEO of the company. Ven Poole, chairman and CEO of Waste Industries, will become a senior vice president and serve on the company's board of directors. Luke Pelosi, currently GFL's COO, will become CFO. Greg Yorston, currently Waste Industries' COO, will retain the title at GFL.
- This deal now puts GFL in 10 U.S. states, along with its existing footprint in every Canadian province except Prince Edward Island. The newly combined venture will have 98 collection operations, 59 transfer stations, 29 MRFs, 10 organics facilities, 47 landfills and more than 8,850 employees.
Dive Insight:
GFL Environmental announced its own recapitalization in April, which valued the company at $5.125 billion and ended speculation about a potential IPO. That deal was led by U.K.-based BC Partners and Ontario Teachers' Pension Plan, which are among multiple outside entities that assumed 65% of the company as a result.
This news came at the start of Waste Expo's Investor Summit, where Dovigi said he intended to keep the company private as long as possible. At the time, Stifel's Michael E. Hoffman asked whether a big regional U.S. acquisition such as Casella Waste Systems might be in the company's future. CEO John Casella told Waste Dive that afternoon he took the comment as a joke and confirmed the company wasn't for sale. Now, it appears that GFL was just looking at another part of the country.
Waste Industries, in business since 1970, has also been busy over the past year. Publicly-traded for more than a decade, the company went private again in 2008 and bought out primary shareholder Macquarie Infrastructure Partners in 2017. Then it announced the surprise acquisition of Colorado-based Alpine Waste & Recycling in May of this year. The company also has operations in North Carolina, South Carolina, Georgia, Tennessee, Virginia, Pennsylvania, Maryland and Delaware.
GFL only entered the U.S. market itself in 2016, with the acquisition of Michigan-based Rizzo Environmental Services. For a company that started in 2007 with eight employees this is a remarkably fast expansion. Barring any other surprises – which could be possible, as evidenced by the Macquarie acquisition of Wheelabrator last week – this looks to be the biggest industry deal of the year by far.
