CPE News (3/15/2021) – GFL Environmental Inc. (NYSE/TSX: GFL) has entered into a definitive agreement to acquire the solid waste and environmental solutions business of Terrapure Environmental Ltd. and its subsidiaries from Birch Hill Equity Partners for CDN $927.5 million.
Terrapure’s battery recycling business is not part of the transaction.
The transaction is subject to certain customary closing conditions, including clearance under the Competition Act (Canada). The acquisition, not subject to any financing conditions, is expected to close in Q3 or Q4 2021.
Burlington, Ontario based Terrapure Environmental was formed in March 2015 from the $300 million acquisition of the industrial division of Newalta Corporation.
Terrapure has since completed two add-on acquisitions: Charlo, New Brunswick based Consolidated Giroux Environment Inc, a provider of industrial dredging services primarily to the mining, municipal and pulp and paper sectors; and Dartmouth, Nova Scotia based Envirosystems Incorporated.
With revenues of approximately CDN $365 million in 2020, Terrapure’s environmental and organics solutions cover a diverse range of waste streams from generation through collection, processing, recovery, recycling, reuse and disposal through its integrated network of assets including its landfill and its liquid and solid waste collection and processing facilities. Terrapure’s operations are supported by a fleet of over 500 collection vehicles and approximately 1,600 employees.
photo credit: Terrapure Environmental
News Release
GFL Environmental Announces Proposed Acquisition of Terrapure Environmental
VAUGHAN, CANADA, March 15, 2021 – GFL Environmental Inc. (NYSE and TSX: GFL) (“GFL” or the “Company”), a leading North American diversified environmental services company, today announced that it has entered into a definitive agreement to acquire the solid waste and environmental solutions business of Terrapure Environmental Ltd. and its subsidiaries (collectively, “Terrapure”) for an aggregate purchase price of C$927.5 million (the “Acquisition”). The Acquisition will exclude the battery recycling business carried on by Terrapure.
Terrapure is an integrated provider of solid and liquid waste management and industrial services to more than 7,000 customers across Canada. Terrapure’s environmental and organics solutions cover a diverse range of waste streams from generation through collection, processing, recovery, recycling, reuse and disposal through its integrated network of assets including its landfill and its liquid and solid waste collection and processing facilities.
Terrapure’s operations are supported by a fleet of over 500 collection vehicles and approximately 1,600 employees.
Terrapure’s operations to be acquired in the Acquisition generated revenue of approximately C$365 million in 2020, inclusive of COVID related volume impacts.
Strategic Benefits of the Acquisition
The Acquisition advances GFL’s growth strategy and aligns with the Company’s goal of growing free cash flow.
The Acquisition is expected to:
• Enhance GFL’s Capabilities and Reach. The Acquisition brings a high-quality, complementary asset network and customer base to GFL’s existing operations and augments GFL’s existing service offerings in several regional markets, including Atlantic Canada. As part of the Acquisition, GFL will acquire the Stoney Creek landfill, an industrial landfill strategically located in the Greater Toronto Area which recently received expansion approval for 14+ years.
• Create Significant Synergies. The Acquisition creates an opportunity for GFL to realize meaningful synergies and earnings accretion. The Company expects the Acquisition to generate at least C$45 million of Adjusted Free Cash Flow1 and at least C$12.5 million in annual cost synergies through operational opportunities from geographical and functional overlap between the existing operations of Terrapure and GFL.
• Create Long Term Shareholder Value. The Acquisition reinforces GFL’s goal of creating long term equity value for shareholders. Terrapure’s strategically located network of assets coupled with its strong operating margins are expected to be immediately accretive to free cash flow and provide opportunities for the Company to continue to pursue its growth strategy.
1 A non-IFRS measure. Due to the uncertainty of the likelihood, amount and timing of effects of events or circumstances to be excluded from these measures, the Company does not have information available to provide a quantitative reconciliation of such projections to the comparable IFRS measure. See “Non-IFRS Measures” below.
“The acquisition of Terrapure is another example of GFL delivering on our commitment to pursue strategic and accretive acquisitions to continue growing our business”, said Patrick Dovigi, Founder and Chief Executive Officer of GFL. “Terrapure’s assets are highly complementary to our existing solid and liquid waste footprint in Canada. All of their service offerings are currently provided by GFL resulting in expected integration and cross-selling opportunities, as well as the expansion of our operations into new regions.” Mr. Dovigi continued, “The timing of this acquisition, which we expect to close in the third or fourth quarter of this year, fits perfectly with our current schedule for completing the integration of our late 2020 acquisitions in the second quarter of 2021, ahead of our previous expectations.” Mr. Dovigi concluded, “We are excited about the opportunities that lie ahead with this acquisition and look forward to welcoming the almost 1,600 employees of Terrapure to the GFL family later this year.”
Timing and Approvals
The Acquisition is subject to certain customary closing conditions, including clearance under the Competition Act (Canada). The Acquisition is not subject to any financing conditions. Closing is expected to occur in the third or fourth quarter of 2021.
Financing of the Acquisition
GFL is well positioned to fund the Acquisition with its strong balance sheet and proven ability to access capital markets. The Company currently anticipates funding the Acquisition using a combination of capacity under its revolving credit facility, cash on hand and incremental financing. The Company will evaluate opportunistic financing opportunities as they present themselves. Following completion of the Acquisition, GFL expects to maintain its current credit rating profile and its leverage within previously stated ranges.
2021 Upside Opportunities2
On February 22, 2021, the Company provided its Full Year 2021 guidance as well as certain 2021 potential upside opportunities. The Company is not updating its previously reported Full Year 2021 guidance. After giving effect to the Acquisition and the upside opportunities identified in the Company’s February 22, 2021 press release, the Company’s launch off point for 2022 could be Adjusted Free Cash Flow of between C$575 million and C$625 million. The 2021 Upside Opportunities are based on a number of assumptions. See “Forward-Looking Statements” below.
Conference Call
GFL will host a conference call to discuss the Acquisition on March 16, 2021 at 8:30 am Eastern time. A live audio webcast of the conference call can be accessed by logging onto the Company’s Investors page at investors.gflenv.com or by clicking here or listeners may access the call toll-free by dialing 1-844-824-3839 or 1-855-669-9657 (conference ID: 10153061) approximately 15 minutes prior to the scheduled start time. The Company encourages participants who will be dialing in to pre-register for the conference call using the following link:https://dpregister.com/sreg/10153061/e4c378d394. Callers who pre-register will be given a conference passcode and PIN to gain immediate access to the call and bypass the live operator on the day of the call. Participants may pre-register at any time, including up to and after the call start time. For those unable to listen live, an audio replay of the call will be available until March 25, 2021 by dialing 1-844-824-3839 or 1-855-669-9657 (access code 10153061). A copy of the presentation for the call will be available on our website at investors.gflenv.com or by clicking here.
2 The 2021 Upside Opportunities include non-IFRS measures such as Adjusted EBITDA and Adjusted Free Cash Flow. Due to the uncertainty of the likelihood, amount and timing of effects of events or circumstances to be excluded from these measures, the Company does not have information available to provide a quantitative reconciliation of such projections to the comparable IFRS measure. See “Non-IFRS Measures” below.
About GFL
GFL, headquartered in Vaughan, Ontario, is the fourth largest diversified environmental services company in North America, providing a comprehensive line of non-hazardous solid waste management, infrastructure & soil remediation and liquid waste management services through its platform of facilities throughout Canada and in 27 states in the United States. Across its organization, GFL has a workforce of more than 15,000. For more information, visit www.gflenv.com. To subscribe for investor email alerts please visit https://investors.gflenv.com or click here.
Investor Relations Contact:
Patrick Dovigi
Founder and CEO
905-326-0101
pdovigi@gflenv.com
Media contact:
Dan Gagnier / Jeffrey Mathews
Gagnier Communications
646-569-5897