KKR and Blackstone compete to acquire GFL Environmental (GFL.US), the deal may become one of the largest leveraged buyouts of the year

According to information from Zhihu Finance APP, KKR, Energy Capital Partners, and Blackstone are reportedly seeking to jointly acquire the environmental services company GFL Environmental (GFL.US), while Brookfield Asset Management and IFM Investors have teamed up to launch a competing bid. This news sent GFL Environmental’s share price soaring by over 10% during after-hours trading on Wednesday, Eastern Time.

Reports indicate that a decision on the deal may be made in the coming weeks, and it could become one of the biggest leveraged buyouts of the year. According to informed sources, no final decision has been made, the timeline may change, other bidders may join, and the existing consortiums may be restructured.

The reports highlight that GFL Environmental’s special committee may need time to evaluate proposals and may ask bidders to raise their offers. The company established a special committee in July to oversee potential merger or privatization negotiations after receiving an initial acquisition proposal. CEO Patrick Dovigi took the company public in 2020 and stated at the time that he would roll all his shares into any potential deal—a structure typically associated with leveraged buyouts.

GFL Environmental is known as one of the largest waste management companies in North America, with approximately 15,000 employees in the US and Canada, operating recycling facilities, transfer stations, and landfills. As of the last close, its market capitalization was nearly $18 billion.

CEO says he will remain at the helm

In an interview, Dovigi said that regardless of the strategic outcome, he intends to continue leading the company and retain ownership.

“I am very satisfied with the current state of the company,” he said, adding that he does not plan to leave the company he has led for nearly two decades. He also commented that GFL Environmental’s development is only in the “third stage” and reiterated his confidence in the company’s outlook, saying it was at an “exciting moment.”

Institutions and retail investors optimistic

On Stocktwits, the number of followers of GFL Environmental stock has increased by over 11% in the past 12 months, during which time retail sentiment on the stock has shifted from “neutral” to “bullish.”

One user commented earlier this week: “We may see an acquisition this week. Before the Fed raises interest rates, the acquirer can refinance fixed-rate debt at lower rates.”

Koyfin data shows that of the 21 analysts covering GFL Environmental, there is a consensus “buy” rating with an average target price of $52.63, implying about a 28% upside from the current share price.

At the time of writing, GFL Environmental shares were up 4.67% pre-market, trading at $42.99.