GFL Environmental Inc., Ontario, announced March 15 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 $743.8 million. The acquisition will exclude Terrapure’s battery recycling business.

Terrapure is an Ontario-based 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. These services are managed through the company’s 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 more than 500 collection vehicles and approximately 1,600 employees. 

Terrapure’s operations to be acquired in the acquisition generated revenue of approximately $292.7 million in 2020, inclusive of COVID-related volume impacts. 

According to GFL, the acquisition advances the company’s growth strategy and aligns with the company’s goal of growing free cash flow.

GFL laid out three ways the acquisition will benefit the company:

It will enhance GFL’s capabilities and reach. According to the company, 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-plus years.

It will create significant synergies. According to the company, the acquisition creates an opportunity for GFL to realize meaningful synergies and earnings accretion. The company expects the acquisition to generate at least $36.1 million of adjusted free cash flow and at least $10 million in annual cost synergies through operational opportunities from geographical and functional overlap between the existing operations of Terrapure and GFL.

It will create long-term shareholder value. According to the company, 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.

“The acquisition of Terrapure is another example of GFL delivering on our commitment to pursue strategic and accretive acquisitions to continue growing our business,” GFL founder and CEO Patrick Dovigi says. “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.”

Dovigi continues, “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. … 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.”

The acquisition is subject to certain customary closing conditions, including clearance under Canada’s Competition Act. The acquisition is not subject to any financing conditions.

GFL says it is well-positioned to fund the acquisition. The company says it currently anticipates funding the acquisition using a combination of capacity under its revolving credit facility, cash on hand and incremental financing but will evaluate opportunistic financing opportunities as they present themselves.