Fairmount Santrol Holdings Inc. (NYSE: FMSA) said Dec. 12 it would sell itself to Unimin Corp. in a cash-and-stock deal to create one of the largest suppliers of sand for use in hydraulic fracturing to shale oil and gas producers.
The deal, which is expected to close by the middle of next year, will create a company with about $2 billion in annual revenue and will supply more than 45 million tons of sand annually. The new company will also supply industrial coatings.
"Together we will serve our customers more efficiently and effectively with a broader and more diverse product offering, greater technical expertise, improved scale and geographic diversity and an expanded logistics platform," Fairmount CEO Jenniffer Deckard said in a statement.
Deckard is expected to be CEO of the new company, which has not yet been named.
The combined company "should bring more discipline and pricing power," Jefferies LLC oilfield service analyst Brad Handler wrote in a report on Dec. 12. The merged business would be able to generate strong cash flow and pay down debt, which he estimated to be about $1.6 billion.
Fairmount shareholders will receive $170 million in cash and own about 35% of the new company after the deal closes. Unimin, a division of Belgium-based SCR-Sibelco NV, will own the rest.
Shares of Fairmount rose as much as 6.9% after the deal was disclosed before finishing up 1.4% at $5.11 on Dec. 12.
Unimin received financing from Barclays Bank and BNP Paribas for the deal.
Recommended Reading
NOV Announces $1B Repurchase Program, Ups Dividend
2024-04-28 - NOV expects to increase its quarterly cash dividend on its common stock by 50% to $0.075 per share from $0.05 per share.
Repsol to Drop Marcellus Rig in June
2024-04-28 - Spain’s Repsol plans to drop its Marcellus Shale rig in June and reduce capex in the play due to the current U.S. gas price environment, CEO Josu Jon Imaz told analysts during a quarterly webcast.
US Drillers Cut Most Oil Rigs in a Week Since November
2024-04-26 - The number of oil rigs fell by five to 506 this week, while gas rigs fell by one to 105, their lowest since December 2021.
CNX, Appalachia Peers Defer Completions as NatGas Prices Languish
2024-04-25 - Henry Hub blues: CNX Resources and other Appalachia producers are slashing production and deferring well completions as natural gas spot prices hover near record lows.
Oceaneering Won $200MM in Manufactured Products Contracts in Q4 2023
2024-02-05 - The revenues from Oceaneering International’s manufactured products contracts range in value from less than $10 million to greater than $100 million.