By James Searle, Greg Dargue, Cameron Hansell and Ben Motamed (Durham University); Nika Karimi Seffat, George Luo, Keshi Edirisinghe, Terry Zhang (University of British Columbia)
Photo: Zibik (Unsplash)
Overview of the deal
Acquirers: Apollo Global Management & BC Partners
Target: GFL Environmental Inc.
Total Transaction Size: $8.0 billion CAD
Closed date: First Quarter of 2025
Target advisors: Brown, Gibbons, Lang & Company Securities, Inc., J.P. Morgan Securities LLC (Financial); Latham & Watkins LLP, Stikeman Elliott LLP (Legal)
Acquirer advisors: Sidley Austin LLP (Legal Counsel for Apollo Funds in the US), Kirkland & Ellis LLP (Legal Counsel for BC Partners in the US), Osler, Hoskin & Harcourt LLP (Legal Counsel for Apollo and BC Partners in Canada)
On January 17, 2025, GFL Environmental Inc. (NYSE: GFL) (TSX: GFL) announced a landmark deal to sell its Environmental Services business to funds managed by Apollo Global Management (NYSE: APO) and BC Partners for an enterprise value of $8 billion. The strategic divestiture allows GFL to optimize its capital structure by substantially reducing its debt load while maintaining a significant 44% equity stake in the business. For Apollo and BC Partners, the acquisition marks their entry into the high-growth sector of waste management and environmental services, offering robust growth prospects. The transaction is designed to leverage the financial expertise of the private equity firms while benefiting from GFL's operational know-how in the environmental services industry. Furthermore, the deal includes a unique clause allowing GFL to repurchase the business within five years, providing flexibility for future strategic decisions.
“The transaction allows us to monetize the Environmental Services business in a tax efficient manner while retaining an equity interest that will allow us to participate in what we expect to be continued value creation from these high-quality assets.” - Patrick Dovigi, Founder and Chief Executive Officer of GFL
Company Details (Acquirers – Apollo & BC Partners)
Apollo Global Management is a global alternative investment management firm that specializes in private equity, credit, and real estate investments. Headquartered in New York, Apollo manages assets across a wide range of industries, including energy, financial services, and healthcare. The firm is known for its strategic acquisitions, investments, and its ability to generate value through operational improvements and strategic growth initiatives.
BC Partners is a leading international investment firm specializing in private equity and credit. Founded in 1986 and headquartered in London, BC Partners focuses on acquiring, developing, and growing businesses across various sectors, including healthcare, consumer products, and technology. The firm emphasizes long-term value creation and operational improvements in the companies it invests in.
Apollo Global Management
Founded in 1990, headquartered in New York, USA
CEO: Marc Rowan
Number of employees: 5,108
Market Cap: $78.68 bn (as of 04/03/2025)
EV: $79.71 bn
LTM Revenue: $26.70 bn
LTM EBITDA: $8.31 bn
LTM EV/Revenue: 18.41x
LTM EV/EBITDA: 11.12x
Recent Transactions: Acquisition of Bridge Investment Group Holdings Inc. for $1.5bn in stock (Feb 2025); Acquisition of majority stake in The State Group from Blue Wolf Capital (Nov 2024).
BC Partners
Founded in 1986, headquartered in London, United Kingdom
CEO: Raymond Svider
Number of employees: 345
Market Cap: -
LTM Revenue: -
LTM EBITDA: -
AUM: $43 bn (2025)
Total no. of investments: 535
Active Investments: 144
Recent Transactions: Acquisition of Runway Growth Capital LLC by BC Partners Credit and Mount Logan Capital (January 2025). Sale of Majority Stake in Synthon to Goldman Sachs Asset Management (December 2024).
Company Details (Target - GFL Environmental)
GFL Environmental Inc. is a Canadian-based waste management company that provides a wide range of environmental services, including solid waste collection, recycling, and soil remediation. Headquartered in Vaughan, Ontario, GFL operates across Canada and the United States, serving municipalities, commercial, and industrial clients. The company is committed to sustainable practices and strives to drive innovation in environmental services.
Founded in 2007, headquartered in Ontario, Canada
CEO: Patrick Dovigi
Number of employees: 20,000
Market Cap: $16.4 bn (as of 13/03/2025)
EV: $21.9 bn
LTM Revenue: $5.63 bn
LTM EBITDA: $0.93 bn
LTM EV/Revenue: 3.9x
LTM EV/EBITDA: 23.6x
Projections and Assumptions
Short-Term Consequences
Apollo and BC Partners’ $8.0bn acquisition of GFL’s Environmental Services (ES) business, announced in January 2025, is expected to stabilize GFL’s finances and provide significant returns to shareholders.
Following the announcement, GFL’s share price dropped from $44.75 on January 8 to $41.72 on January 21. This drop was primarily driven by investor uncertainty surrounding the company’s future after a significant divestiture, as well as profit-taking strategies following a short-term rally, where the stock had risen from $43.53 on January 7 to $44.75 on January 8.
The share price grew steadily from January 8 to $46.00 on February 24. This represents increased investor confidence and positive market sentiment after GFL outlined its intention to allocate C$3.75 billion from the sale to reduce leverage, strengthening its balance sheet, thereby lowering interest expenses and improving credit ratings. GFL also announced plans to use C$2.25 for share buybacks, indicating management confidence in undervaluation, leading to an expectation of a higher EPS.
On February 24, GFL announced Q4 results and 2025 predictions. The report showed a full-year net loss of $737.7 million and a declining FCF in Q4. It also showed a clear reduction from 2024 revenue of $7.86bn to $6.5bn in 2025 (excluding contribution from ES). These results caused a knee-jerk reaction, leading to a short-term panic selling of stock, causing the share price to drop from $46.00 on February 24 to $43.04 on February 27.
However, this was quickly followed by value-based buying of the stock, indicating that analysts and shareholders approved of GFL’s strategic shift towards solid waste management after the Q4 report showed that solid waste volumes improved sequentially by 310 basis points, ahead of expectations.
In 2025, EBITDA is expected to reach $2.5bn and FCF is expected to grow $130 million YoY (including ES).
Long-Term Upsides
The transaction positions GFL to not only fortify its balance sheet but also to strategically reinvest in its core operations and explore growth opportunities, driving long-term shareholder value in a dynamically evolving sector. By leveraging the $3.75 billion from the deal proceeds to reduce debt, GFL aims to lower its net leverage to a targeted 3.0x, enhancing its credit profile and steering towards an investment-grade rating. This deleveraging effort is anticipated to cut annualized cash interest expenses by approximately $200 million, thereby boosting free cash flow conversion significantly.
With up to $2.25 billion earmarked for share repurchases, the transaction not only promises an immediate reduction in debt but also facilitates a substantial return of capital to shareholders through both repurchases and potential dividend increases, while keeping the net leverage within the low 3x range. The option retained by GFL to repurchase the Environmental Services business within five years injects strategic flexibility, preserving its stake in future growth and value creation.
The collaboration with BC Partners and Apollo leverages their robust track record in scaling high-growth businesses in defensive sectors, capitalizing on the substantial consolidation opportunities within the environmental services industry, particularly with potential expansion into the U.S. market. The partnership is expected to harness Apollo's strategic and financial resources to propel both organic and inorganic growth, maintaining synergies between environmental services and solid waste management, which could enhance the ability to cross-sell services effectively.
Risks and Uncertainties
The waste sector has seen intensive antitrust scrutiny in past deals (e.g. Waste Management’s prolonged approval process and required divestitures when acquiring Advanced Disposal Services). Even though the current U.S. administration is expected to be more lenient on M&A reviews, Apollo and BC Partners must still secure clearances from competition authorities in Canada and the U.S. Potential legal hurdles include meeting environmental regulations (e.g. transferring permits) and any foreign investment reviews. These regulatory checks could delay or derail the deal if concerns arise.
In March 2025, the Trump administration imposed new tariffs targeting imports from China, the EU, and Canada, affecting materials used in waste management operations. Steel and aluminium tariffs, in particular, will increase costs for GFL’s waste bins, trucks, and recycling infrastructure, potentially reducing profit margins. Additionally, retaliatory tariffs from Canada and the EU could disrupt the supply chain for waste equipment. Steel garbage trucks, roll-off containers, and aluminium recycling bins could see price hikes of 10-25%. Trade restrictions may also cause longer delivery times and equipment shortages, which could lead to operational bottlenecks.
Private Equity & Venture Capital interest in the waste management & recycling sector has increased over the past year, due to its stable cash flows and defensive sector characteristics. This signals robust competition for contracts and acquisition targets (driving up the price for valuations), so Apollo/BC’s venture will need to scale and innovate to maintain an edge in this crowded market.