Apergy to Combine With Ecolab’s Upstream Energy Business in a Tax-Free Transaction, Creating a Global Leader in Production-Optimization Solutions
- Global leader for life of field production optimization solutions, including artificial lift equipment, chemical solutions, and digital technologies, offering customers increased productivity over the well lifecycle, with approximately 80% of revenue from production-related product lines
- Combined business expected to generate pro forma revenue of approximately
$3.5 billionand adjusted EBITDA of approximately $615 million(before synergies) in 2019 with strong recurring revenue, cash flow, and through-cycle performance
- Expected annual run-rate cost synergies of
$75 millionwithin 24 months of closing, plus incremental sales growth opportunities, benefiting both sets of shareholders
- Financially compelling transaction with strong benefits for
Apergyand Ecolabshareholders, creating a combined company enterprise value of approximately $7.4 billion, including approximately $3.9 billion1 of stock to Ecolabshareholders and assumption of estimated Upstream Energy net debt of approximately $492 million; existing Apergyand Ecolabshareholders to own 38% and 62% of the combined entity, respectively
- Expanded and diversified global customer base, including international and national oil companies, large independents, and oil field services companies
- Significant geographic footprint with ~40% of revenue in international markets and established international platform for expansion opportunities
- Strong balance sheet with pro forma net leverage of approximately 1.7x2 excluding cost synergies and 1.5x including cost synergies, with combined company expected to de-lever even more given significant pro forma free cash flow generation
Apergyto host conference call today at 8:30amEastern / 7:30 amCentral
The merger combines
“This transaction is a great development benefiting both
Key Strategic & Financial Benefits
The transaction brings together two highly complementary, leading oilfield equipment and specialty chemical companies with strong operating platforms and relatively stable end markets.
- Meaningful opportunity to drive incremental revenue growth by offering a broader equipment and service offering to an expanded and diversified global customer base, including national and international oil companies.
- High-quality, differentiated portfolio of products and services that combines well-known brands, including ChampionX, Norris, Harbison-Fischer, and US Synthetic.
- Greater scale and reach through a strong global footprint and operating expertise across
North America, Europe, Asia Pacific, Middle East, and Latin America.
- Expanded platform with innovative technology to drive the next generation of digital technology adoption and production optimization solutions in the oilfield.
- An experienced management team and the combined talents and skills of
Apergyand ChampionX team members with a continued strong focus on culture and employee engagement.
- 2019E pro forma revenue of approximately
$3.5 billionand adjusted EBITDA of approximately $615 million(excluding synergies).
- Expected annualized run-rate cost synergies of approximately
$75 millionwithin 24 months of closing through reduced corporate expenses, including avoidance of public company costs for ChampionX, efficiencies in supply chain procurement, leveraging of facilities, and SG&A reduction opportunities.
- Significant sales synergies over time given the ability to utilize ChampionX’s geographic footprint and customer base to expand sales of Apergy’s production and automation technology products as well as the opportunity to offer Apergy’s digital solutions to ChampionX customers.
- Strong recurring revenue base and production-optimization portfolio supports more stable, through-cycle EBITDA and cash flow generation.
- Significant pro forma cash generation with low capital intensity across both businesses results in attractive free cash flow conversion and supports a balanced and effective capital allocation strategy going forward.
- Pro forma net leverage ratio of approximately 1.7x2, excluding cost synergies, and 1.5x including cost synergies. Leverage is expected to be approximately 1.0x net debt/EBITDA after the first full year following the combination.
Management, Board of Directors and Headquarters
The transaction will be effected through a “Reverse Morris Trust” transaction pursuant to which ChampionX is expected to be spun-off to Ecolab’s shareholders and simultaneously merged with and surviving as a wholly-owned subsidiary of
Based on Apergy’s closing price of
The transaction is subject to customary closing conditions, including (i) effectiveness of Apergy Form S-4 and Ecolab Form 10; (ii)
Conference Call and Investor Information
A replay of the conference call will be available on Apergy’s website. Also, a replay may be accessed by dialing 1-888-843-7419 in
A copy of the investor presentation will be made available on Apergy’s investor relations website in advance of the conference call.
A trusted partner at nearly three million customer locations,
Cautionary Notes on Forward Looking Statements
This news release includes “forward-looking statements” as that term is defined in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed transaction between
Any forward-looking statements speak only as of the date of this communication. None of
Important Information About the Transaction and Where to Find It
In connection with the proposed transaction,
Participants in the Solicitation
This communication is not a solicitation of a proxy from any security holder of
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote of approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Pro Forma Financial Information
Certain financial measures and other information have been adjusted for the proposed transaction between
1 Based on Apergy’s closing share price of
2 Calculated based on
Investors: David Skipper
Media: John Breed