First Takes on GFL's Acquisition of Secure
Implications for GFL and the Produced Water Industry
It was announced this morning that GFL Environmental is acquiring Secure Waste Infrastructure Corp. I have positions in both of these companies, and the announcement brings up some mixed emotions. My first thought was of Michael Scott’s quote from The Office, “I feel like all of my kids grew up, and then they married each other. It’s every parent’s dream.” All joking aside, I think the purchase price of 11x 2026E EBITDA (pre-synergies) is too low and GFL is getting an excellent deal. Secure shareholders will need to approve the transaction, but let’s assume that will happen. So, getting on with it, here are my first takes on the deal for Secure, GFL, and the municipal waste/produced water industries.
First Takes For Secure
The sale is a completion of Secure’s transformation. Early in its history, Secure was much more exposed to energy services and new drilling activity. After experiencing immense pain in the 2015 oil market crash, the company closed or sold most of their energy services operations, becoming more waste focused and increasing their recurring cash flow from 40% of cash flow to 80%.
Once the evolution was complete, the company needed to convince the investment world of the transformation. They did this by changing the company’s name, transitioning its sell-side coverage from energy services analysts to waste analysts (or general industrial analysts), and by attending industrial conferences.
If the sale of the Tervita assets in the 2024 sale was not enough to convince investors that the economics and attributes of Secure’s business is akin to that of municipal waste, the sale of the remaining part of Secure should certainly be enough. Both the management teams and Waste Connections and GFL both see the parallels and are spending billions of dollars in the sector.
The sale price, while is low given the quality of the business, is a big win for management and the shareholders. The headline price is almost double where Secure was trading one year ago and over six-times where Secure was trading five years ago. I know Secure shareholders may be disappointed in the price, but this has been a fantastic outcome for long-term shareholders.
First Takes for GFL
GFL is picking up a fantastic business, with attributes and economics that are possibly better than GFL’s core, municipal waste business. While Secure has “energy” exposure, its revenue stream is quite stable. Additionally, while Secure’s landfills and saltwater disposal wells have similar economics, returns, and geographic and regulatory moats as GFL’s municipal landfills, Secure doesn’t have the high recurring costs of buying and maintaining a fleet of trucks. Hence, why Secure has the highest margins and ROIC in the waste space (this is likely understated due to Secure’s gathering and transportation pipelines - more on this later).
GFL is picking up a business with multiple growth levers.
Secure should benefit from both pricing and volume growth.
Secure should benefit from growth via additional acquisitions.
Secure should benefit from the ability to re-deploy ample growth capital at high returns ($100M per year at 20%+ IRRs)
GFL is executing a large acquisition that is accretive to its EBITDA and FCF margins, free cash flow per share, and its ROIC, all while being balance sheet neutral.
GFL is getting the opportunity to pick up ample synergies via optimizing the combined companies’ landfill usage and elimination of some back-office expenses. Management is estimating and “highly conservative” $25mm in synergies, without any cross selling opportunities. It is possible for Secure’s landfills to accept municipal waste. Furthermore, if I remember correctly, I think there is high geographic overlap between Secure and GFL’s off-balance sheet ES business, while only minimal customer overlap.
GFL is picking up an excellent management team and a great CEO for their produced water business - I am going to miss interacting with Allen as a CEO of one of my holdings.
More Value-Added Financial Engineering Incoming? As I mentioned in a previous article or a tweet or both, the sale of ES was one of the more clever examples of corporate transactions that I’ve seen. GFL used an UP-C transaction to defer the tax consequences; GFL was able to lever-up ES to accelerate its growth; GFL was able to de-lever its balance sheet while freeing up cash for a share repurchase, and still have some control over ES. Lastly, GFL retained the ability buyback ES at an attractive multiple if the growth pans out. Why is this relevant to the Secure acquisition?
25% of Secure’s business comes from its gathering and transportation assets (Energy Infrastructure or EI). Secure’s waste business is a customer of the EI business, as EI transports Secure’s skim oil. Secure will want to have some influence there, but it doesn’t need to control the entire company. Selling, say 55%, of EI to a sponsor, similar to what GFL did with ES, would likely generate 10-11x EBITDA for GFL, allow it to further increase its ROIC and earnings margins, and generate cash for share repurchases (1).
GFL is now more likely to be included in the Russell and TSX 60 Indexes.
Furthermore, GFL slightly reduced its sponsor overhang given the share count going up, as shares will be issued in the transaction.
First Take for the Municipal Waste and Produced Water Industries
I have been an advocate of the waste thesis for produced water disposal companies since I first wrote about Secure two years ago. I expanded on this in writings on both LandBridge and WaterBridge. Over that time I have met many like-minded investors who agree with the thesis. While there are still skeptics, I would point out the skeptics do not include the management teams of Waste Connections and GFL. The first obvious take away is that this is beneficial for WaterBridge and LandBridge, which should get more eyes on them from generalists, energy/midstream, and waste investors. While I think the 11x 26E EBITDA multiple for Secure was light, it is a better comp for WaterBridge than it appears at first glance. Note that 25% of Secure is EI, which likely is worth 8-10x. Also, some of its waste business is metals recycling and its lone energy services chemicals business, both of which should trade closer to 6-8x. This implies a much higher multiple for the produced water disposal part of the company. WaterBridge, for its part, has spoken a bit about the parallels between their business and the municipal waste industry, but only in conversations around the IPO process. They should become more public about this over time. It will be interesting if Waste Connections, GFL, or other municipal waste companies continue to expand their exposure to produced water. It’s worth noting that Waste Connections did transactions in the space in both 2024 and 2025, so this is the third-one by a municipal waste company in the last three years.
As of now, mid-day 4/13/2026, GFL’s stock price is down hard (~8%). I don’t think it will take long for the market to warm up to this deal and GFL to revert to its previous price. It will be interesting to see what happens to GFL’s price, as well as WaterBridge’s (currently $26.15 per share or 10x 26E EBITDA), in the coming days and weeks.
1. Note to GFL Management, if you do this, let me know where I can send a consulting invoice - or at least hook me up with some steak knives.
Disclaimer: Not a solicitation to buy or sell any security. Not investment advice. For informational purposes only. Due your own due diligence. As of the time of writing, long GFL, Secure, LandBridge, and WaterBridge. Under no obligation to update holding information.
Good comments, thank you, but - as you say - the price is low and the terms of the transaction uncertain. In order to gain my yes, I believe shareholders of SES deserve a bigger pie of GFL.