Fairmount Santrol is merging with Unimin to create a $2 billion provider of industrial raw materials. Chesterland-based Fairmount distributes sand-based products for the oil and gas and industrial sectors.
New Canaan, Conn.-based Unimin makes coatings and chemicals for the construction, industrial and energy sectors and is a subsidiary of Belgian mining company SCR-Sibelco NV.
Fairmount CEO Jenniffer Deckard is expected to lead the combined firm, which plans to list its stock on the New York Stock Exchange where Fairmount currently trades with a market cap of about $1.2 billion.
The deal — structured as a tax-free, cash and stock transaction — calls for Fairmount shareholders to receive 74 cents a share, or $170 million, and 35 percent of the combined company. It is expected to close in mid-2018.
The new, yet-to-be-named public company will immediately become an industry-leading proponent and industrial materials solutions provider with 45 million tons of annual sand and mineral processing capacity and 3 million tons of annual coating capacity. It will serve both energy and industrial customers through a large-scale North American terminal network 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’s projected revenue is anticipated at $2 billion with adjusted EBITDA of approximately $400 million.
- The transaction is expected to generate $170 million cash payment to Fairmount shareholders.
- The combined company is targeting $150 million of identified annual operational synergies, resulting in over $1 billion in value creation.
- Fairmount shareholders, including equity award holders, will own 35 percent of the combined company, with the Antwerp, Belgium-based Sibelco owning the remaining 65 percent.
The location of the combined entity’s headquarters is yet to be determined. Regional offices are expected to be retained.
Wells Fargo Securities LLC is serving as Fairmount’s financial adviser and Jones Day is serving as its legal adviser. Morgan Stanley is serving as Sibelco’s financial adviser, and Freshfields Bruckhaus Deringer and Hughes Hubbard are serving as its legal advisers.
In connection with the transaction, Unimin has secured financing from Barclays Bank PLC and BNP Paribas to refinance the outstanding debt and certain transaction expenses of both companies.