Sand supplier U.S. Silica Holdings Inc. will acquire the NBR Sand unit from New Birmingham Inc. in a $210 million cash and stock transaction.
The acquisition will expand U.S. Silica’s capacity and product offering for the growing regional sands market, boosting the company’s ability to satisfy customer needs, said Bryan Shinn, president and chief executive officer of U.S. Silica, in a July 18 press release. The company expects the acquisition to generate earnings per share accretion of $.20 to $.30 in 2017.
Tyler, Texas-based NBR Sand operates a single sand mine and plant that can produce just over 2 million tons of fine-grade frac sand per year, U.S. Silica said in the release. The NBR Sand unit produces 40/70 Mesh and 100 Mesh Silica Sand. It has 12 storage silos with capacity of over 10,000 tons and five load-out lanes, and over 20 years of quality reserves. The east Texas facility mainly services producers drilling and completing wells in nearby basins.
“We expect to unlock the full potential of this excellent mine by utilizing our strong customer relationships and power distribution network,” Shinn commented. “We believe demand for regional sands will continue to grow as a cost-effective proppant option for many completions and this is another important step to position U.S. Silica as a leader in the regional sand market.”
The acquisition is expected to close next month.
Jefferies LLC analysts said they supported the acquisition, noting that U.S. Silica’s robust logistics network, including access to 50 transloads and 6,826 railcars, would significantly broaden NBR Sand’s target market. Analysts said they believed the unit’s underperformance is due to the lack of access to the Permian completion market. In a July 18 research note, analysts said they understood U.S. Silica would seek to develop rail loading facilities adjacent to the existing Union Pacific rail line to efficiently move sand to the Permian Basin.
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