Yahoo Finance GFL Pushed by Activist ADW to Sell Environmental Solutions Unit
(Bloomberg) -- Activist investor ADW Capital Management LLC is calling on waste management firm GFL Environmental Inc. to sell its environmental services division in lieu of a full sale of the company.
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“We cannot think of any reason why the company would explore any other path than to sell its ES division,” ADW founder Adam Wyden said in a letter to GFL’s board.
New York-based ADW holds 1.65 million shares — about 0.45% — in GFL, according to the letter, a follow-up to one in November asking the company to either go private or sell assets to reduce its debt.
“While we would be in favor of an ‘outright’ sale of the entire company, we recognize the scope and scale of such a transaction,” Wyden wrote in Wednesday’s letter reviewed by Bloomberg News. “Given the minimal tax leakage, the company does not lose much by doing a ‘two step’ take private in our view and leaves the door open to see if the company can achieve a true public company cost of capital that a business of this quality merits.”
GFL shares jumped 10.4% on June 3 on reports that the company was fielding interest in its environmental services unit. The stock, which is up about 7.3% since the beginning of the year, closed Tuesday in New York at $37.03, giving the company a market value of about $13.9 billion. Including $7.1 billion in debt, GFL has an enterprise value of more than $21 billion, according to data compiled by Bloomberg.
Wyden wrote that a sale of the ES business would “create a solid-waste pureplay” that could potentially go on to trade at a higher multiple than peer Waste Connections Inc. The asset sale would also “remove most, if not all, of the overhang from their lead sponsor, BC Partners, who has shown a willingness to sell the stock at basically any price/multiple” of earnings before interest, taxes, depreciation and amortization for the next 12 months, according to the letter.
A representative for GFL couldn’t immediately be reached for comment, while a spokesperson for BC Partners didn’t immediately provide comment.
Ontario Teachers’ Pension Plan Board, private equity firm BC Partners and Singapore’s sovereign wealth fund GIC Pte together hold roughly 30% of GFL, according to data compiled by Bloomberg.
One of North America’s largest waste haulers, GFL raised about $1.4 billion in a US initial public offering in 2020. Its shares have almost doubled since its IPO.
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