GFL Environmental (GFL) sold off over 10% after announcing the $6.4B acquisition of SECURE Waste (SES), representing roughly 11x forward EBITDA - a ~20% premium to SES shares but a discount to GFL…

… enabling it to fund 80% of the deal with equity, keeping leverage neutral. Investors are likely concerned by the multiple and the target’s industrial waste focus, which is more volatile than GFL’s solid waste business…

… but not materially so, with 80% recurring volumes and the western Canada footprint acting as a natural hedge to higher diesel prices - which eat into solid waste margins. Post-close, GFL should see higher FCF conversion…

… providing more rope for executing density-enhancing M&A, of which management expects to do another ~$500M this year. With the peer group discount opening up…

… it’s an interesting time if you think the team behind over 300 deals might understand value creation better than public investors.