GFL Environmental Inc. ( GFL ) shares surged on Tuesday after the company disclosed an agreement to sell interest in its Environmental Services business to Apollo Global Management, Inc. ( APO ) and BC Partners. The deal values the Environmental Services business at an enterprise value of C$8.0 billion ($5.6 billion).

GFL will retain a C$1.7 billion equity interest in the Environmental Services business and expects to realize cash proceeds from the sale of approximately C$6.2 billion net of the retained equity and taxes.

As per the deal, GFL will retain a 44% equity interest in its Environmental Services business, with the Apollo Funds and BC Funds each holding a 28% equity stake.

GFL plans to use up to C$3.75 billion of the net proceeds from the transaction to repay debt, with up to C$2.25 billion allocated for share repurchases. The remainder will be used for transaction fees and general corporate purposes.

The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions.

Patrick Dovigi, Founder and Chief Executive Officer of GFL, said, “The transaction will allow us to materially delever our balance sheet which will accelerate our path to an investment grade credit rating.”

“The transaction allows us to monetize the Environmental Services business in a tax efficient manner while retaining an equity interest that will allow us to participate in what we expect to be continued value creation from these high-quality assets. In addition, GFL will maintain an option, not an obligation, to repurchase the Environmental Services business within five years of closing.”

The company plans to provide more details on the transaction’s financial impact when it reports its 2024 full-year results in February.

Investors can gain exposure to GFL via TCW Transform Supply Chain ETF ( SUPP ) .

Price Action: GFL shares are up 3.57% at $45.59 premarket at the last check Tuesday.

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