GFL: One consortium pulls ahead as shareholders split on price, board weighs options
One of the two bidding consortia for GFL Environmental has become the leading contender to take the fourth largest North American waste-management company private, CTFN has learned.
Both groups are still in the process, though any winner faces a divided shareholder base.
Shareholders have split into two camps over what a take-private deal is worth, it is understood. One group is ready to take a deal in the low $50s per share. The other thinks the price needs to get closer to $60.
Both camps are making their case to the target board’s special committee. The committee continues its work with its advisor, CIBC, to decide what fair value is.
That decision carries real weight, it is understood.
Going private would be “far more lucrative” for management, which would get private-company incentive plans. But the deal has to be fair.
The vote
GFL moved its headquarters to Miami but remains domiciled in Canada. Any deal needs a majority of the minority vote, and insiders’ shares don’t count.
That puts the holders pushing for $60 in a strong position. Bidders cannot rely on CEO Patrick Dovigi’s stake to get a deal approved. They must win over the rest of the register.
Plans B, C
A sale is not the only option. The board is looking at everything. That includes selling certain assets at close to 18x EV/EBITDA, as well as a massive share buyback.
There are lots of different options available to the company, it is understood. That is why the process has dragged on since the special committee was formed and take-private talks became public.
The board is hoping to reach a decision by October 29, when GFL reports third-quarter earnings. Still, it could take longer.
Background
CTFN reported on October 2 that two private-equity consortia had presented bids to the special committee. KKR, Energy Capital Partners and Blackstone are bidding together, and Brookfield Asset Management have teamed up on a rival offer.
Both were inching to the upper end of the $50-to-$55-per-share range, which would be needed to get a deal done.
At the same time, strategic buyers had floated “very high” multiples for assets in certain markets and regions. These carve outs were designed to not run into antitrust issues.
On September 15, CTFN reported GFL had formed the CIBC-advised special committee and that Dovigi and management had stepped back from the process. Dovigi intends to roll his entire stake into any deal and stay on as CEO.
CTFN reported on July 6 that Dovigi was willing to entertain offers to take the company private at around $50 a share.
No deal is guaranteed, and the process could still end without a transaction.