Some of the biggest names in private equity are circling GFL Environmental, a Canadian waste-and-recycling company, in what could become one of the largest take-private deals of the year. Bloomberg News reported Wednesday that KKR, Blackstone and Energy Capital Partners have teamed up to bid, while Brookfield and IFM Investors are weighing a rival offer.
GFL, which provides solid waste collection, recycling and disposal services across North America, has been a frequent subject of buyout speculation. The company went public in 2020 and has grown rapidly through acquisitions, but its shares have traded below what some investors consider their intrinsic value, making it an attractive target for private equity firms that can take the company private and restructure it away from the glare of public markets.
Why are buyout firms teaming up?
Pairing up is common in large take-private deals. It spreads the cost and risk across multiple firms, and it can help them line up enough debt financing to get the deal done. A consortium approach also reduces the amount of equity any single firm has to commit, which is important when the target is as large as GFL.
KKR and Blackstone are two of the world's largest alternative asset managers, with deep pockets and extensive experience in infrastructure and industrial businesses. Energy Capital Partners focuses on energy and power assets, which could be relevant given the growing importance of renewable energy and waste-to-energy projects. Brookfield, also a major infrastructure investor, and IFM Investors, an Australian fund manager, would bring their own financial muscle and operational expertise.
The fact that two separate groups are forming suggests the bidding could get competitive. GFL's special committee of independent directors is reviewing the proposals and could press both sides to raise their price. A decision could come in the coming weeks, according to Bloomberg.
What's driving the interest?
Waste and recycling is a steady, cash-generative business. People and businesses produce garbage regardless of the economic cycle, which makes these companies resilient and attractive to private equity firms that like predictable cash flows to service debt. GFL also has a large footprint and a track record of acquiring smaller rivals, which could be continued under private ownership.
Adding fuel to the fire, GFL's CEO Patrick Dovigi told Bloomberg he would be open to a deal. That kind of signal from management can encourage bidders to move forward, as it reduces the risk of a hostile fight.
The interest in GFL comes at a time when private equity firms are sitting on record amounts of unspent capital, or 'dry powder', and are under pressure to put that money to work. Dealmaking has picked up in recent months as financing conditions have eased and sellers have become more realistic about valuations.
What it means for investors
For everyday investors, the main takeaway is that GFL's stock could move significantly if a deal is announced. When a buyout is completed, shareholders typically receive a cash premium above the current share price. However, there is no guarantee a deal will happen, and the price could be lower than some hope.
If you own GFL shares, it's worth watching for updates from the special committee. If you don't, this story is a reminder that private equity can be a powerful force in public markets, often unlocking value that public investors have overlooked.
For those interested in the broader trend, this is another example of how infrastructure-like assets—such as waste management, energy, and utilities—are attracting big money from buyout firms. These businesses offer stable returns and long-term growth potential, which is why they are increasingly at the center of large deals.
As always, it's important to remember that no deal is done until it's announced and approved by shareholders. Until then, speculation can drive volatility, so investors should be cautious about making decisions based on rumors.
