GFL Environmental further solidified its Illinois presence with the acquisition of Peoria Disposal Company (PDC) in a deal that closed today.
The 93-year-old family company was one of the state's largest remaining private waste and recycling companies and a well-respected name throughout the national waste industry. Employees were notified last week, as initially reported by WMBD.
"This transaction gives us a unique opportunity to acquire one of the best family-owned and operated, vertically integrated set of assets in the USA with a leading regional market position in a secondary market with some of the strongest operating margins in our industry, while expanding our solid waste footprint within the U.S. Midwest," said GFL CEO Patrick Dovigi in a statement.
PDC's annual revenue is more than $110 million per year, including operations in Illinois and Missouri with more than 400 employees. Financial terms were not disclosed, but Stifel estimated the purchase price could be around $500 million.
PDC President Royal Coulter, as well as Vice President Matt Coulter (one of multiple sons involved in the business), are expected to stay on. Other members of the Coulter family will consult and advise on the transition. The transaction excludes PDC Laboratories, another family entity, which provides environmental testing services.
“After months of family meetings and input from trusted advisers we made the difficult decision to put the company up for sale. We ran a process where we interviewed four other parties, and while GFL was not the highest bidder, after spending two days with Patrick, our family felt that GFL was the right company to take over PDC and continue on the legacy that we have built over the last 93 years in Peoria," said Royal Coulter in a statement. "It was clear to us that GFL shared the same core values as PDC: entrepreneurial spirit, operational excellence, a focus on safety and a commitment to giving back to the communities that it serves."
The industry's recent round of M&A activity has seen many family businesses selling to larger players, and PDC has long been one of the more coveted options.
John Coulter, Royal's grandfather, started PDC as a one-truck operation serving the Peoria, Illinois, area in 1928. The company has seen continuous growth in the decades since, including more than 70 acquisitions of its own, and it has remained under family leadership throughout. Royal took over the business in 1979, after the unexpected death of his father, Elmer, and he successfully withstood a minority owner's efforts to sell his shares to Waste Management. In the years since, PDC and regional subsidiary companies under the Area brand have expanded into a major Midwestern presence.
Today, PDC's more than 350 collection vehicles (an estimated 10% of which run on compressed natural gas) service customers throughout central Illinois and northeast Missouri. Those customers include an estimated 5,000 commercial accounts, as well as 150,000 residential accounts via 60-plus municipal contracts. The company's portfolio consists of three active landfills, one future landfill, two transfer stations, a wastewater treatment plant and one MRF. The latter facility, in Pekin, Illinois, went through a $3.5 million upgrade in 2019.
PDC's landfills are considered an especially important asset in the deal, as all have substantial disposal capacity remaining. The company's Hickory Ridge Landfill is currently projected to close by 2084, the Clinton Landfill by 2062 and the Indian Creek Landfill by 2050. The Peoria City/County Landfill No. 3, which PDC won the contract to operate in 2009, is set to open by 2024 and will also have many decades of capacity.
Multiple sites are also expected to have substantial gas potential, and Dovigi said the company sees "an opportunity to unlock significant value with landfill [gas-to-energy] projects at the PDC landfills as part of our focus on GFL Renewables."
As Stifel Managing Director Michael E. Hoffman noted in recent analysis, the transaction is the latest example where, amid heightened M&A activity, "another multi-generation solid waste company has determined now is the time to sell despite there being a well-defined family succession plan."
In commentary on a recent financing announcement by GFL, Hamzah Mazari of Jefferies also noted this may be a sign "that the company looks to be emerging as a buyer of choice for large independents in both existing and adjacent markets." Mazari, a managing director, attributed this, in part, to GFL being an organization whose CEO and founder has a significant stake in the company and may be able to move more quickly through the regulatory process than larger peers.
According to Mazari, GFL is believed to have beat out other large public bidders in all but one of its major deals in recent years: Waste Industries, WCA Waste, the Waste Management-Advanced Disposal Services divestitures and now PDC. The latter three deals are key elements of GFL's Midwest presence, which started with the acquisition of a Michigan company in September 2016.
All of this year's M&A activity, including the sale of multiple long-running family companies, has caught the attention of other waste industry observers as well.
“Peoria Disposal has been an industry leader for decades, and this acquisition reflects the increasing consolidation of the industry," said Solid Waste Association of North America CEO David Biderman, upon hearing the initial acquisition reports. "I’ve known the Coulter family for many years and have visited their offices in Peoria. They are good people, and I wish them all the best.”
During GFL's most recent earnings call, in late July, Dovigi outlined the potential to acquire $500 million to $1 billion worth of private company revenue over the next 12 to 16 months. One of the company's larger recent transactions was the August acquisitiont of Terrapure Environmental's solid waste and environmental solutions assets in Canada.
This morning, it announced completing 31 acquisitions so far in 2021, including 16 since July 1. That includes purchasing hauling operations in Canada, and a Michigan landfill, from Waste Management in the third quarter. GFL also closed on an acquisition of the Alabama Dumpster group companies today.