U.S. Silica (SLCA) To Buy Sand Producer For $210 Million
Zacks Investment Research | Jul 19, 2016 07:25AM ET
U.S. Silica Holdings Inc. (NYSE:SLCA) has agreed to acquire the NBR Sand unit of New Birmingham Inc., a privately-owned industrial minerals and logistics company for $210 million, subject to closing adjustments. The deal will be financed 57% by cash on hand and 43% through restricted stock. The transaction is expected to close in Aug 2016.
The NBR Sand unit operates a single sand mine and plant with a capacity of over two million tons of fine-grade frac sand per annum. The unit is located in Tyler, TX, and provides its products to customers drilling and completing wells in the region. This acquisition will enable U.S. Silica to expand its product offering and capacity in the regional sands market, and enhance customer satisfaction.
Currently, the NBR Sand unit produces 40/70 Mesh and 100 Mesh Silica Sand on roughly 1,400 acres. A low-cost manufacturer, the unit operates 12 storage silos with a capacity of more than 10,000 tons. With the integration, U.S. Silica aims to combine its own powerful distribution network and long-standing customer relationships to optimally utilize the complete potential of the unit.
U.S. Silica is optimistic about the growth of the regional sand market and is looking to create a strong foothold in the same. The company is also in the process of identifying further acquisition options that will fit its strategy. As energy markets recover and the demand for regional sand increases, the company is ready to take advantage of further identified opportunities and maximize customer satisfaction.
Recently, U.S. Silica also bought additional reserves in Ottawa, IL. The company purchased fully permitted 327 acres of land adjacent to its existing facility from a privately-owned mining company. The property is expected to add a 30 million ton proven reserve of high-quality Ottawa White sand. The company’s strong balance sheet helps it take advantage of such opportunities.
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