Canadian waste management giant GFL Environmental Inc. GFL-T is in exclusive talks with Apollo Global Management to sell its environmental services division for around $8-billion.
GFL launched an auction for the division earlier this year and Apollo has emerged as the likely buyer, according to two sources familiar with the negotiations. The deal is expected to be announced in early January, however, talks are still ongoing and the terms could change.
GFL's environmental services division offers liquid waste management and soil remediation services, among other things, and the business is appealing to private equity buyers because it has predictable revenues and can be considered an infrastructure asset.
The Globe and Mail is not naming the sources because they were not authorized to speak publicly about the transaction.
GFL disclosed on a quarterly conference call in November that it expected to make around $6-billion after tax on the sale. The exact amount that will flow to GFL in the $8-billion Apollo deal is still being negotiated and will depend on the corporate tax treatment.
GFL has said it plans on using $3.5-billion of the sale proceeds to pay down debt, and the remaining amount will be used to buy back shares and for general corporate purposes. One possibility is for shares of the two main backers, BC Partners and OTPP, to be repurchased.
GFL is selling the division because its $9.5-billion debt load started making rating agencies and investors nervous as interest rates rose. The company's share price struggled during the first half of 2024, but has kept climbing since The Globe reported in June that GFL was weighing a privatization or a sale of the environmental services division.
