Jim Cramer is Watching These 8 Stocks

6. GFL Environmental Inc. (NYSE:GFL)

Number of Hedge Fund Holders: 32

Cramer mentioned GFL Environmental Inc.’s (NYSE:GFL) sale of its majority stake in its Environmental Services business.

“Yesterday, a waste management company called GFL Environmental announced that it’s selling the majority of its environmental services business to a pair of private equity firms for over $6 billion… Looking at the transactions we’ve seen just this week, while some of them likely would’ve been challenged by Biden’s ideologically driven regulators, most of them seem pretty justifiable. All of them make great business sense.”

GFL Environmental (NYSE:GFL) provides non-hazardous solid waste management and environmental services in Canada and the United States, including collection, transportation, recycling, disposal, liquid waste management, and soil remediation. Recently, it announced that it had entered into a definitive agreement to sell its Environmental Services business for an enterprise value of $8.0 billion. As part of the deal, the company will retain a $1.7 billion equity interest in the business and expects to receive approximately $6.2 billion in cash proceeds after accounting for the retained equity and taxes.

As per Reuters, the transaction follows months of pressure from activist group ADW Capital Management, which had urged GFL to divest its environmental solutions business and focus solely on waste management. The company plans to use up to $3.75 billion of the net proceeds from the deal to reduce debt, with up to $2.25 billion allocated for share repurchases. Following the debt repayment, it expects its net leverage to stand at 3.0x.

CEO Patrick Dovigi stated that the transaction will significantly strengthen the company’s balance sheet, moving it closer to achieving an investment-grade credit rating. Additionally, GFL Environmental (NYSE:GFL) has the option to repurchase the Environmental Services business within five years of the deal’s expected close in the first quarter of 2025, which will also lead to a reduction in its cash interest expenses by approximately C$200 million.