Canadian garbage billionaire Patrick Dovigi’s GFL nears $30 billion sale

Canadian waste tycoon Patrick Dovigi's GFL Environmental Inc. is moving closer to a sale to private equity, with two rival groups of the world's largest investment firms competing to take the trash and recycling company private.

One group is made up of KKR & Co., Blackstone Inc. and Energy Capital Partners. The other pairs Brookfield Asset Management with IFM Investors, an Australian fund manager owned by pension funds. Talks have advanced far enough that an agreement could be reached as early as next week, according to reports on Monday, though the two sides are still negotiating terms and the structure of a deal.

Both groups have proposed that Dovigi, GFL's founder and chief executive officer, roll his entire stake into the new company and stay involved in running it.

Bids are expected to land between $50 and $55 a share, according to earlier reports. That would be a premium of 14% to 25% over the roughly $44 at which GFL traded in New York on Monday, and would value the company's equity at about $21.8 billion to $24 billion. Including about $10 billion of debt, a deal would be worth more than $30 billion, making it one of the largest buyouts ever of a Canadian-listed company.

From goalkeeper to waste mogul

Dovigi, 47, grew up in Sault Ste. Marie, Ontario, and played junior hockey as a goaltender. The Edmonton Oilers of the National Hockey League drafted him in 1997. He moved into the waste business in his early twenties and founded GFL, short for Green For Life, in 2007.

He built the company through scores of acquisitions with the backing of private equity firms including Macquarie, BC Partners and Ontario Teachers' Pension Plan, before listing it in Toronto and New York in 2020. GFL now describes itself as the fourth-largest diversified environmental services company in North America. It collects household and commercial waste and runs transfer stations, recycling plants and landfills across Canada and 19 US states.

Dovigi held 11.8 million multiple voting shares and about 466,000 subordinate voting shares as of March 31, according to GFL's latest management circular. Each multiple voting share carries 10 votes, which gave him about a quarter of the company's voting power at the time. His 12.3 million shares are worth about $540 million at Monday's price and would be worth $614 million to $675 million in the reported bid range.

Months of interest

GFL's board set up a special committee in July to review approaches from buyout firms after receiving early interest and hiring financial advisers. Dovigi said on the company's earnings call that month that the interest "completely vindicated" GFL's growth strategy, and that he planned to roll his equity into any deal and had no plans to leave.

He later said he was open to taking the company private at a valuation above its market price, adding that no decision had been made and that the board would put "shareholders first." He described GFL as "sort of in the third inning of a long baseball game."

The bidding comes weeks after GFL closed its acquisition of Secure Waste Infrastructure Corp. on Sept. 1, issuing about 75.1 million new shares to Secure's owners and taking on a new $1 billion term loan. The deal expanded GFL's business in western Canada and in industrial waste and energy infrastructure, and brought in more than 2,000 Secure employees.

GFL reported second-quarter revenue of C$1.95 billion ($1.38 billion), up 16.3% from a year earlier, and adjusted earnings before interest, taxes, depreciation and amortization of C$591.2 million ($419 million). It raised its full-year revenue forecast to between C$7.51 billion and C$7.53 billion ($5.3 billion). The company will report third-quarter results on Oct. 28.

A buyout would likely face review by Canada's Competition Bureau, given the company's large share of municipal waste collection in the country.