GFL Environmental Inc., a North American waste management company, is actively evaluating potential take-private transactions following interest from several buyout firms. The company has formed a special committee of independent board members and engaged a bank to advise on the review process. This comes after The Globe and Mail and other media outlets reported on the initial approaches, and GFL's CEO Patrick Dovigi later confirmed the multiple unsolicited expressions of interest.
CEO Patrick Dovigi stated that the offers are "materially higher" than the company's current market value of approximately $20.9 billion. He emphasized his intention to roll over 100% of his equity into any proposed deal, indicating he is not a seller at current price points like $40, $50, $60, or even $70 per share. One of the interested parties specifically included a condition for Dovigi to retain his stake, which aligns with his long-term vision for GFL.
The discussions follow GFL's second-quarter earnings call where Dovigi highlighted the potential for a private structure to accelerate growth compared to being a public company. GFL's stock climbed 3.9% to $41.81 a share on the New York Stock Exchange following these announcements. The company has a history of private equity backing before going public in March 2020, and Dovigi expressed confidence in the intrinsic value created, which has attracted these buyout firms. Reported bids range from $50 to $55 per share from at least six private equity firms, with offers expected by mid-September. GuruFocus's GF Value™ estimates GFL's intrinsic value at $45.27 per share, suggesting it might be 6.6% undervalued.
This move could significantly reshape GFL's ownership, potentially unlocking shareholder value if a deal materializes. Dovigi aims to double GFL's size within the next five to ten years with appropriate capital support, seeing a leveraged buyout as a way to achieve this more quickly. The company's net leverage was up to 3.9x in the second quarter, partly due to M&A and foreign currency translation, with plans to return to the "mid-threes" by year-end and pursue an investment-grade credit rating.
