Calumet Specialty Announces $235 Million DealPosted: Updated:
Indianapolis-based Calumet Specialty Products Partners LP (Nasdaq: CLMT) has announced a $235 million agreement to acquire the parent company of Anchor Drilling Fluids USA Inc. in Oklahoma. The deal is expected to close within a week.
March 26, 2014
Indianapolis, Ind. -- Calumet Specialty Products Partners, L.P. (NASDAQ: CLMT) ("Calumet" or the "Partnership") a leading independent producer of specialty hydrocarbon and fuel products, today announced that it has entered into a definitive agreement to acquire ADF Holdings, Inc., the parent company of Tulsa, Oklahoma-based Anchor Drilling Fluids USA, Inc. ("Anchor") on a debt-free basis for total cash consideration of approximately $235 million, subject to customary purchase price adjustments. Calumet expects to close the acquisition of Anchor by March 31, 2014, subject to customary closing conditions.
Privately-held Anchor, established by Bob and Phil West in 2005, is a leading independent provider of drilling fluid solutions, completion fluids and production chemicals to the oil and gas industry with more than 30 manufacturing, mixing, storage and distribution facilities in 13 states. Anchor designs, manufactures and sells its products to approximately 250 exploration and production ("E&P") companies operating in some of the most active conventional and unconventional oil and gas resource plays in North America, including the Bakken, Barnett, Eagle Ford, Fayetteville, Granite Wash, Haynesville, Marcellus, Niobrara, Permian, Piceance, Uinta and Utica.
Anchor develops custom formulations and innovative solutions based on unique customer and well specifications. Through its extensive line of drilling and completion fluids, Anchor delivers solutions that reduce drilling and completion time, help to control reservoir formation pressures and maximize oil and gas production, contributing to improved well economics for end-users.
This transaction positions Calumet as one of the leading suppliers of drilling fluids to the domestic E&P industry, a sector that continues to enjoy rapid growth due to advances in drilling technology and increased exploration activity in identified and emerging unconventional resource plays. The addition of Anchor to Calumet's asset portfolio will also serve to increase the Partnership's specialty products sales in a business that generates consistent cash flow with limited ongoing capital investment.
For the year ended December 31, 2012, Anchor generated earnings before interest, taxes, depreciation and amortization ("EBITDA") of approximately $26.3 million. The Partnership currently anticipates that Anchor will report a year-over-year increase in EBITDA of approximately 20% for the full-year 2013. The Partnership intends to finance the acquisition through the issuance of debt securities or through borrowings under its revolving credit facility.
"With the acquisition of Anchor, Calumet will become a leading independent producer and marketer of drilling fluid solutions in the United States," stated Jennifer Straumins, President and COO of Calumet. "During the past decade, North America has witnessed a surge in oil and gas production, supported by the application of advanced drilling techniques in unconventional resource plays. Anchor's market leading position as an established independent producer of drilling fluids, coupled with its deep base of established customers and expansive distribution network, position it as a key beneficiary of the trend toward increased exploration and production spending."
"We believe the execution of a vertical integration strategy – one that puts us closer to our crude oil suppliers and customers – represents a long-term competitive advantage for the Partnership. As a key supplier of drilling fluids to oil and gas producers in the field, the Anchor acquisition helps to further expand our relationships at the wellhead."
Straumins concluded: "We welcome Anchor's more than 400 employees to the Calumet family and look forward to building upon their legacy of consistent, profitable growth."
Latham & Watkins LLP acted as legal counsel to Calumet with respect to this transaction.
About Calumet Specialty Products Partners, L.P.
Calumet is a master limited partnership and a leading independent producer of high-quality, specialty hydrocarbon products in North America. Calumet processes crude oil and other feedstocks into customized lubricating oils, solvents, waxes and asphalt used in consumer, industrial and automotive products. Calumet also produces fuel products including gasoline, diesel and jet fuel. Calumet is based in Indianapolis, Indiana and has twelve facilities located in northwest Louisiana, northwest Wisconsin, northern Montana, western Pennsylvania, Texas, New Jersey and eastern Missouri. For more information, please visit www.calumetspecialty.com.
Source: Calumet Specialty Products Partners LP