GLF Environmental: BMO sees sovereign/PE consortium takeover as the likely outcome

Investing.com — Analysts at BMO covering GFL Environmental Holdings' (TSX:GFL) (NYSE:GFL) possible takeover—as published on Investing.com last Wednesday—have good reason to believe that a consortium of sovereign wealth funds and private equity (PE) firms has the upper hand on the deal at this point.

According to the financial institution, which has been in contact with GFL's management, among the possible outcomes for the current situation, the path of the least resistance would be for a consortium of new management to displace the current controlling PE ownership, allowing a gradual exit of BC Partners, OTPP, and GIC - the current controlling shareholders - thus moving toward a slow multi-year takeover of the company's remaining assets.

The second most probable outcome, according to the Montreal-based bank, would be the sale of only GFL's environmental Services division, with a similar consortium of Sovereign wealth/PE having the upper hand again.

Recently, Massachusetts-based Clean Harbors (NYSE:CLH) voiced its interest in GFL's waste management business at an open Q&A session during the Stifel Cross Sector Insight Conference.

Asked if the possible takeover of GFL's waste management business would be a good fit for his company, Eric Gerstenberg, Clean Harbors' Co-CEO, said, "Definitely." He added that the potential sale of the division "sounds very interesting." "They [GFL] have a nice footprint, some past management that used to be part of our team, so that's very interesting."

However, according to BMO, no offers have been made to that extent at this point. Moreover, the analysts noted that GFL's management has been clear about only selling the entire division rather than a part of its assets.

Finally, the firm considers an immediate full takeover of the company's assets as the less likely path at this point due to the company's "size and complexity."