Rock Products

JAN 2018

Rock Products is the aggregates industry's leading source for market analysis and technology solutions, delivering critical content focusing on aggregates-processing equipment; operational efficiencies; management best practices; comprehensive market

Issue link: https://rock.epubxp.com/i/921242

Contents of this Issue

Navigation

Page 17 of 73

14 • ROCK products • January 2018 www.rockproducts.com FRAC SAND INSIDER Fairmount Santrol and Unimin Corp., a wholly owned subsidi- ary of SCR-Sibelco NV, announced that the boards of directors of both companies have approved a definitive agreement under which Fairmount and Unimin will combine in a tax- free, cash and stock transaction. The new company, which will list on the New York Stock Exchange, "will combine the two organizations' strong product portfolios and asset footprints to create an indus- try-leading proppant and industrial materials solutions provider, serving both energy and industrial customers," the companies said. The combined company is expected to have 45 million tons of annual sand and mineral processing capacity and 3.0 million tons of annual coating capacity. In addition, the combined company will operate a comprehensive logistics platform with a large-scale terminal network across North America, comprising 96 distribution terminals with 18 unit-train capa- ble terminals, and access to all major railways serving major oil and gas basins. On a pro forma basis, the new company would have had rev- enue of approximately $2.0 billion and Adjusted EBITDA of approximately $400 million, excluding expected synergies, for the 12 month period ended September 30, 2017. The industrial segment represents 45 percent of gross profit and the proppants segment represents 55 percent. The transaction is expected to generate significant share- holder value, including a $170 million cash payment to Fairmount shareholders. In addition, it is expected to strengthen the companies' leadership positions in serving both the industrial and energy markets through a broader, more diverse product offering and logistics footprint. The combined company is targeting $150 million of identified annual operational synergies, resulting in over $1 billion in value creation. "This is a compelling transaction for our shareholders and for our many other stakeholders, including our customers, employees and communities," said Jenniffer Deckard, pres - ident and chief executive officer of Fairmount Santrol. "By combining the complementary strengths of both Unimin and Fairmount Santrol, we will create a premier provider of industrial materials and proppant solutions with bene- fits and growth opportunities that far surpass what either company could achieve alone. 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. We have long respected the Unimin orga- nization and believe our shared cultures of sustainability and long-term value creation will enable us to realize the benefits of this merger." Campbell Jones, president and chief executive officer of Unimin, said, "We are excited to join forces with Fairmount as we believe this combination is an ideal fit for our value-driven orientation and long-term vision of strength through diver- sity of products and end markets. Fairmount is an excellent partner for Unimin and shares our strategy of providing superior and innovative product solutions for the growing energy and industrial segments. Together, our combined net- work of flagship plants, terminals and rail access will deliver greater capacity and more cost-competitive supply to meet our customers' needs." Matthew LeBaron, chairman of the Fairmount Santrol board of directors, said, "We are pleased with this combination, which brings together two industry leaders at an opportune time in the industry. This transaction will deliver signifi- cant value for Fairmount shareholders through immediate cash consideration and the opportunity to participate in the upside of the combined company. The combined company will have a strong capital structure, backed by diverse cash flow streams, which will position it to make strategic growth investments and further enhance returns for shareholders. On behalf of my fellow directors, we look forward to what Fairmount and Unimin will accomplish together." "This combination is a unique opportunity to create an indus- try-leading company with the ability to generate significant long-term value for shareholders," said Jean-Luc Deleersny- der, chief executive officer of Sibelco. "We are confident that the combined company will be in a strong position to lever- age its strengths to generate significant cash flow that can be used to capture targeted growth opportunities and to reduce debt. Our position as a long-term investor reflects our belief in the value that will be created by the merger and enables the consolidated entity to leverage our global capabilities." Upon closing, the combined company's board of directors is expected to comprise 11 members, six of whom will be recommended by Sibelco, including Deleersnyder, and four of whom will be recommended by Fairmount. Deckard, current chief executive officer of Fairmount Santrol, is expected to serve as CEO and as a director of the combined company. Sibelco has the right to nominate the independent chairman of the combined company. The executive leadership team will include a combination of existing leaders from both Unimin and Fairmount, with the combined company leaning on the significant strengths of the quality workforce across both companies. Fairmont Santrol, Unimin Strike Merger Deal

Articles in this issue

Links on this page

Archives of this issue

view archives of Rock Products - JAN 2018