GFL Shares Fall 15% After Rejection of $22 Billion Takeover Bid
Key Facts
GFL Environmental said on November 10 that its special committee had completed its review of unsolicited proposals to acquire the company and take it private, confirming that the board had unanimously voted in favor of remaining a public company. According to an Investing.com report citing The Globe and Mail, the company rejected a bid of about $22 billion, or roughly $52 per share, from a consortium including Blackstone, KKR and Energy Capital Partners. The stock fell about 15% in premarket trading to $39.02 after the review’s conclusion was announced. The decision closed a path from which investors had been expecting a higher price, while keeping the company on its standalone strategy. GFL’s official statement did not disclose the value of the bids or the names of the bidders.
GFL said the independent committee examined the company’s business outlook and stakes in the environmental services and infrastructure sectors, as well as industry forecasts and market conditions. The committee concluded that the proposals were not in the company’s best interests in light of its long-term value creation opportunities. Special committee chairman Dino Chiesa said the proposed valuations included a premium to the stock’s trading price, but “do not reflect the full value of our standalone strategy.” According to an Investing.com report citing The Globe and Mail, the board pressed for a bid of $58 per share or more. But the report said private equity groups did not raise their valuations, leaving the gap between the offered price and the value sought by the board unresolved.
Management’s case for remaining independent centers on the company’s ability to expand cash flows and direct them toward growth and shareholders. Chief Executive Patrick Dovigi said the improved free cash flow profile “should enable us to double free cash flow per share over the next five years.” Management added that stronger cash flow gives it flexibility to balance acquisitions, investment in organic growth and returning capital to shareholders, while maintaining its net leverage target. The company said opportunistic and recurring share buybacks remain among the options available. These plans put expected cash flow at the center of the board’s rationale for rejecting the bids and sticking with the company’s standalone path.
Third-quarter results published by GFL on October 28 showed growth in revenue, operating earnings and adjusted free cash flow. Revenue was $2,155.3 million, up 27.2% year over year, including a 5.7% contribution from base pricing. Adjusted EBITDA rose 26.8% to $678.7 million, compared with $535.1 million in the third quarter of 2025. Adjusted EBITDA margin was 31.5%, versus 31.6% a year earlier, with underlying margin expansion of 115 basis points after excluding the effects of acquisitions and diesel prices. Adjusted free cash flow also rose to $272.5 million from $180.5 million in the year-earlier period.
On October 28, the company raised its guidance for fiscal 2026, estimating revenue of between $8,055 and $8,075 million, compared with the previous range of $7,510 to $7,530 million. It also raised its estimate for adjusted EBITDA to between $2,490 and $2,495 million, from $2,290 million, and adjusted free cash flow to about $1,020 million, from $900 million. But results also included a loss from continuing operations of $28.0 million in the third quarter, compared with net income of $90.4 million in the third quarter of 2025. GFL said it is targeting an improvement in adjusted free cash flow conversion to the mid-40s range. The updated guidance provides financial context for management’s expectation of stronger cash flows, while the board’s decision on the bids remained based on its view of the company’s long-term value.
The decision to remain public does not mean all exit processes related to financial sponsors have stopped. GFL said parties remain interested in buying some or all of the sponsor shareholders’ stakes, and that it would facilitate the process as needed. The company described this as a separate path from selling the entire business when it announced the end of its review of the proposals. GFL describes itself as North America’s fourth-largest diversified environmental services company, providing solid waste management services in Canada and 19 U.S. states. It has more than 17,000 employees, according to its statement.
In a September interview with Bloomberg, Dovigi said he was open to considering offers to take the company private if they offered a valuation above the stock’s then-current trading price. After the review ended, the board unanimously reaffirmed its commitment to the company’s public strategy, while management expects its cash flow trajectory to give it room to expand investment and return capital. Some parties remain interested in the sponsor shareholders’ stakes, according to GFL, which is prepared to facilitate a sale of those stakes as needed. The offer reported by The Globe and Mail remained at about $52 per share, below the $58 per share or more that the report said the board had sought. The company’s statement did not specify a later date or a new step in the review of the proposals, which has ended.