GFL Environmental aims to divest its environmental services division, with a consortium backed by Apollo offering $5.6 billion.

Global asset management giants Apollo Global Management and BC Partners backed investment consortium is very close to acquiring a controlling stake in the environmental services division of GFL Environmental Inc. According to media reports citing sources, the deal led by Apollo and BC Partners could value GFL Environmental's business at approximately 8 billion Canadian dollars (about 5.6 billion US dollars), including debt. Sources indicate that the investment consortium is in advanced negotiations regarding the acquisition of shares, and an agreement could be officially announced in the coming days. As the information is confidential, the sources requested anonymity. The sources also mentioned that GFL Environmental may retain the option to buy back these shares from Apollo Global Management and BC Partners at some point in the future. GFL Environmental is listed on the Canadian and US stock markets, with the stock price listed in the US having risen approximately 36% in the past year. BC Partners has been active in the Canadian market recently, having agreed to sell GardaWorld at the end of last year, with the sale transaction valuing the security services company at approximately 13.5 billion Canadian dollars. Sources state that discussions regarding the GFL Environmental deal are ongoing, and the agreement could potentially be delayed. Representatives from Apollo, BC Partners, and GFL Environmental declined to make any comments. According to their official website, GFL Environmental, headquartered in Vaughan, Ontario, offers solid and liquid waste management as well as exclusive soil remediation services in the Canadian and US markets. The company has over 20,000 employees. Over the past year, the stock price of GFL Environmental listed on the NYSE has increased by 36%, leading to a market value of approximately 17 billion US dollars. On Monday, the stock price fell by 1.4% to 44.02 US dollars, but rose by 1.7% in after-hours trading on the NYSE following the acquisition news. In 2018, a large investment consortium led by BC Partners invested in GFL, valuing the Canadian environmental services company at approximately 5.1 billion US dollars (including debt). The Ontario Teachers' Pension Plan was also a significant institutional investor at the time, and GFL's founder and CEO Patrick Dovigi continued to hold a substantial amount of the company's shares. In recent years, GFL has rapidly acquired some key competitors, becoming one of the largest environmental waste management companies in North America. However, the increasing debt burden to support this performance growth and expansion has become a major concern for GFL investors, prompting the company to seek buyers for some of its lower-profit businesses. In November, GFL executives stated that their environmental services division had received interest from multiple investment institutions and could sign agreements by early 2025. The company indicated at the time that most of the proceeds would be used to repay company debt, with the remainder available for stock buybacks or other purposes in the secondary market. Sources mentioned that last year, GFL's environmental services division generated approximately 1.7 billion Canadian dollars in revenue, with earnings before interest, taxes, depreciation, and amortization (EBITDA) exceeding 500 million Canadian dollars. Analysts suggest that the environmental and waste management sector is relatively recession-resistant, supported by policies and environmental regulations, with relatively stable demand and strong cash flow predictability. Therefore, large asset management giants often target such segments with defensive characteristics, especially in the current situation where the Federal Reserve may maintain high interest rates in the long term, which could lead to significant macroeconomic fluctuations. Generally, asset management giants like Apollo Global Management and BC Partners aim to enhance overall value and increase investment returns through operational focus and capital operations within a 5-10 year investment period. This could involve secondary transfers, going public on the stock market through an IPO, or selling back to the original shareholders (such as GFL indicating the potential option to buy back shares) to realize exits while earning profits.