GFL Environmental to Buy Secure Waste in C$6.4 Billion Deal

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(Bloomberg) — GFL Environmental Inc. agreed to acquire an Alberta waste company in a deal worth C$6.4 billion ($4.6 billion), expanding its footprint in western Canada and in industrial and energy-linked services.

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GFL will pay C$24.75 per share for Calgary-based Secure Waste Infrastructure Corp. The deal will be structured with 80% in stock and 20% in cash and is expected to close in the second half of the year, according to a statement Monday. 

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Bloomberg News reported on Sunday that the companies were in negotiations and near an agreement. 

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The deal “enhances our scale and expands our ability to offer a full suite of services to our customers in western Canada,” GFL Chief Executive Officer Patrick Dovigi told analysts. Most of Secure’s business is similar to what GFL does in Canada and the US, he added.

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Shares of GFL tumbled 7.5% while Secure Waste rose 7.4% to trade just below C$23 as of 11:10 a.m. in Toronto.

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Secure Waste gets about three-quarters of its adjusted Ebitda from its waste management business, which includes recycling of metals and recovered oil. The other quarter comes from energy infrastructure including oil pipelines and storage. (Ebitda stands for earnings before interest, taxes, depreciation and amortization.) 

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Over the past several years, CEO Allen Gransch has retooled Secure to focus on waste infrastructure rather than its traditional oil-field services business, lowering its sensitivity to commodity price movements. This insulates the company from the “dizzying highs and terrifying lows” of oil prices, GFL’s Dovigi said, adding that his company began working on the deal before the war in the Middle East.

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In 2023, GFL made a failed attempt to pick up a package of Secure’s assets and has since been monitoring the company, according to Dovigi, who has been actively pursuing growth through acquisitions. GFL’s market capitalization had tripled to C$21 billion over the past six years, prior to Monday’s selloff. 

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The Secure Waste deal marks one of GFL’s largest recent transactions and Dovigi suggested it won’t be its last this year. The Canadian company expects to deploy as much as C$500 million into tuck-in deals, he said. 

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Overall, GFL expects to have nearly C$2.5 billion of additional capital over the next four years to use in acquisitions, organic growth projects, share buybacks and dividends, “and should be an opportunity for significant incremental value creation,” Chief Financial Officer Luke Pelosi told analysts.

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The transaction will significantly increase GFL’s market capitalization, improving the firm’s chances of getting included in major stock indexes, Pelosi said.  

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Earlier this month, GFL announced the acquisition of Frontier Waste Solutions, which operates dozens of sites across Texas. Financial details of that transaction weren’t publicly disclosed, but a person familiar with that deal said it was worth about $900 million.

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GFL has been in the news in Toronto because of a string of shootings around its facilities and the homes of executives, including Dovigi. Last week, police charged 42-year-old Ilan Philosophe with discharging a firearm and conspiring with another person to discharge a firearm at two residences in Toronto in September 2024, one of which was Dovigi’s. 

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(Updates with share prices and quotes from GFL executives and adds context from fourth paragraph onwards.)

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