Archrock is expected to fund the transaction with approximately £160m of cash and 21.7 million newly issued Archrock common shares to the seller
Archrock has signed a definitive agreement to acquire all the assets of Elite Compression Services, a portfolio company of JDH Capital Company, including approximately 430,000 of predominately large-horsepower compression assets for total consideration of £321m.
Archrock is expected to fund the transaction with approximately £160m of cash and 21.7 million newly issued Archrock common shares to the seller.
The acquisition is expected reinforce its focus on large horsepower compression serving midstream infrastructure with blue-chip customers.
In addition, the company would sell approximately 80,000 active and idle compression horsepower to Harvest Midstream, a US-based privately-held midstream service provider, for $23m in cash.
Archrock president and chief executive officer Brad Childers said: “We are excited to announce the acquisition of Elite’s excellent contract compression operations in a transaction that will immediately benefit Archrock shareholders through accretive earnings and cash flow growth.
“The assets being acquired from Elite are highly utilized, predominantly large-horsepower compression units, more than 80% of which are contracted for more than three years with blue-chip customers. We expect the acquired assets to generate approximately $55 million of annualized adjusted EBITDA, inclusive of $5 million in annualized cost synergies.”
For the transaction, Citi is serving as exclusive financial advisor and Latham & Watkins serving as legal advisor to Archrock, while Intrepid Partners is serving as exclusive financial advisor and Kirkland & Ellis serving as legal advisor for JDH Capital and Elite.
The acquisition and pending sale transactions are subject to the customary closing conditions, including receipt of regulatory approvals, and are expected to be closed in the third quarter of 2019.
Headquartered in Houston, Texas, Archrock is an energy infrastructure company with a pure-play focus on midstream natural gas compression. The company employs approximately 1,700 people.
It is a major of natural gas compression services to customers in the oil and natural gas industry throughout the US. The company also offers aftermarket services to customers that own compression equipment in the US.