GFL Acquires Secure Waste in $6.4 Billion Deal
GFL Environmental Inc. has announced a significant acquisition, purchasing Secure Waste Infrastructure Corp. for $5.4 billion. This strategic move aims to enhance GFL’s presence in Western Canada while diversifying its municipal waste management operations.
Details of the Acquisition
The acquisition price stands at $24.75 per share, reflecting a 16% premium over Secure’s last closing price. GFL plans to finance the deal primarily through stock, with an arrangement of 80% shares and 20% cash. Upon completion, this will allow Secure shareholders to hold a 16% stake in the combined entity.
GFL’s Growth and Market Position
- Founded in 2007, GFL has pursued rapid expansion through acquisitions.
- The company has completed over 270 deals across Canada and the United States.
- GFL services hundreds of municipalities and boasts a market capitalization of approximately $22 billion on the Toronto Stock Exchange.
Secure Waste Infrastructure, originally an energy services firm, has transformed its business model in recent years. Now operating primarily in Western Canada and North Dakota, it relies on industrial waste management for 85% of its revenue.
Secure Waste’s Financial Performance
- 15% of revenue stems from energy infrastructure operations.
- Secure’s stock has surged by 430% over the past five years, demonstrating the company’s robust performance.
- Secure has merged with Tervita and acquired four metals recycling businesses during this period.
Analysts suggest that GFL is paying a considerable premium for Secure, approximately 25.5 times its earnings. Ian Gillies from Stifel noted that Secure’s enhanced resilience aligns it more closely with peers in the residential and industrial waste sectors.
Future Prospects
While GFL experienced a strong initial performance post its 2020 public listing, it has faced challenges recently, with shares down 12% amid broader municipal waste market trends. The GFL-Secure deal awaits approval from Secure’s shareholders, with two investors controlling 20% of Secure already pledging their support.
