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Unimin and Fairmount to merge

Unimin and Fairmount to merge
Unimin and Fairmount to merge

Fairmount Santrol and Unimin Corporation have announced the board of directors of both companies have approved an agreement under which Fairmount and Unimin will combine in a tax-free, cash and stock transaction.

Fairmount Santrol has a sand production facility in Wedron and Unimin has one in Utica.

According to a company news release, the new company, which will list on the New York Stock Exchange, will combine the two organizations’ product portfolios and asset footprints to create a proppant and industrial materials solutions provider, serving both energy and industrial customers.

A proppant is a solid material, typically sand, treated sand or man-made ceramic materials, designed to keep an induced hydraulic fracture open, during or following a fracturing treatment.

The combined company is expected to have 45 million tons of annual sand and mineral processing capacity and three million tons of annual coating capacity.

In addition, the combined company will operate a logistics platform with a large-scale terminal network across North America, comprising 96 distribution terminals with 18 unit-train capable terminals, and access to all major railways serving major oil and gas basins.

The new company would have had revenue of approximately $2 billion. The industrial segment represents 45 percent of gross profit and the proppants segment represents 55 percent.

The transaction is expected to generate significant shareholder value, including a $170 million cash payment to Fairmount shareholders. In addition, it is expected to strengthen the companies’ positions in serving both the industrial and energy markets. The combined company is targeting $150 million of identified annual operational synergies, resulting in over $1 billion in value creation.

“This is a compelling transaction for our shareholders and for our many other stakeholders, including our customers, employees and communities,” said Jenniffer Deckard, President and Chief Executive Officer of Fairmount Santrol, in a press statement.

“By combining the complementary strengths of both Unimin and Fairmount Santrol, we will create a premier provider of industrial materials and proppant solutions with benefits and growth opportunities that far surpass what either company could achieve alone."

Campbell Jones, President and Chief Executive Officer of Unimin, said in a statement: “Together, our combined network of flagship plants, terminals and rail access will deliver greater capacity and more cost-competitive supply to meet our customers’ needs.”

“We are confident that the combined company will be in a strong position to leverage its strengths to generate significant cash flow that can be used to capture targeted growth opportunities and to reduce debt," said Jean-Luc Deleersnyder, Chief Executive Officer of Sibelco, in a press statement.

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