Aimed at creating an integrated global provider with an enterprise value of $1.5bn, the transaction is expected to enable Enerflex gain increased scale and efficiencies to bolster its ability to cater to customers in important natural gas, water, and energy transition markets
Enerflex has agreed to acquire Exterran, a US-based midstream infrastructure solutions provider, in an all-stock deal valued at around $735m.
The merger between the companies is aimed at creating an integrated global provider with an enterprise value of $1.5bn. It will operate as Enerflex and will continue to be headquartered in Canada.
Currently, Enerflex supplies natural gas compression, oil and gas processing, electric power generation equipment, and refrigeration systems.
The Canadian firm said that the transaction will enable increased scale and efficiencies to bolster its ability to cater to customers in important natural gas, water, and energy transition markets. Besides, it will improve shareholder value via sustainable enhancements in profitability and cash flow generation, said Enerflex.
Enerflex president and CEO Marc Rossiter said: “The Transaction is immediately accretive to shareholders; enhances our presence, offerings, and scale across our regions; and importantly, executes upon our years-long strategic goal of increasing recurring revenues to improve the profitability and resiliency of our platform.
“Enerflex and Exterran each have a long history of global expertise in the delivery of modular energy solutions. Together, we are more efficient and better positioned in global capital markets.”
As per the terms of the deal, Enerflex will issue 1.021 of its shares for each of the shares of Exterran. Post-merger, Enerflex’ existing shareholders will have a stake of around 72.5% in the combined entity, while Exterran’s shareholders will hold the remaining 27.5% stake.
Enerflex will continue trading on the Toronto Stock Exchange (TSX) after the closing of the deal and plans to get listed on either the New York Stock Exchange (NYSE) or the NASDAQ as well.
Exterran president and CEO Andrew Way said: “We are excited about the ability to create shareholder value through this Transaction and improving our product and service offering.
“The scale and efficiencies this combination brings is the right path for Exterran and brings significant opportunities for accelerated growth in produced water treatment and energy transition products and services.”
The deal, which is subject to approvals of both the firms’ shareholders, regulatory and stock exchanges’ approvals, and other customary conditions, is anticipated to close in Q2 or Q3 of 2022.
In conjunction with the deal, Enerflex has signed a binding agreement with the Royal Bank of Canada to secure a fully committed financing comprising a three-year revolving credit facility of $600m and a five-year bridge loan facility of $925m.