GFL prefers a sale over a spinoff

Article Excerpt

GFL ENVIRONMENTAL INC. $57 is a hold. The company (Toronto symbol GFL; Manufacturing sector; Shares outstanding: 420.1 million; Market cap: $23.9 billion; Dividend yield 0.1%; Takeover Target Rating: Medium; www.gflenv.com) is North America’s fourth-largest waste-management firm. Activist investor ADW Capital Management and its affiliates, which together control less than 1% of GFL’s shares, wants GFL to sell its Environmental Solutions division. That business (19% of revenue) collects and treats hazardous liquids and offers soil re-mediation services. Due to that pressure, the company now plans to solicit offers for this business through an auction process. GFL also announced that it does not plan to put itself up for sale, even though its high-quality businesses would undoubtedly attract several offers. Moreover, major shareholders such as the Ontario Teachers’ Pension Plan and private equity firm BC Partners, which together hold roughly 24% of GFL, could block any takeover offer. GFL Environmental is a hold. hold…