Eagle Materials to buy CRS Proppants

Dallas, Texas-based Eagle Materials has agreed to buy CRS Proppants and its subsidiaries, including Great Northern Sand for $225 million.

CRS Proppants’ operations are highly complementary with Eagle Materials’ existing frac-sand operations the company says.

CRS Proppants operations include:

  • A northern-white frac-sand mine and processing facility in Wisconsin that is currently being expanded from approximately one million to two million tons per year capacity
  • Existing long-term sales contracts with targeted customers for approximately 85% of the two million tons per year of capacity UP rail-based trans-load network from the mine into the Permian and other target basins.

The cash purchase price of approximately $225 million is subject to adjustments for working capital and other items, and will be funded by operating cash flow and borrowings under Eagle’s bank credit facility.
Revenues, EBITDA and earnings before income taxes from continuing operations for the nine-months through September 30, 2014 for CRS Proppants were $64.7 million, $12.2 million and $8.7 million, respectively.

The acquisition is expected to be immediately accretive and synergies of $5 million are expected to be realized within the first 12 months. The acquisition will roughly double Eagle’s frac-sand production capacity and expand Eagle’s frac-sand reserves, Eagle Materials says in a statement.

Steven Rowley, Eagle Materials’ president and chief executive, said, “The acquisition represents another key step in Eagle’s growth strategy for the frac-sand business. We are building a low delivered-cost frac-sand supply-system that will serve a number of targeted shale plays with the highest-quality northern white sand.

“This acquisition will enable us to immediately serve the Permian basin, in particular, with increased production, while creating synergies with our other operations in Texas that are currently serving the Eagle Ford with sand from our Illinois mine.”

Under the definitive agreement, the acquisition is subject to certain customary conditions, including clearance under the Hart-Scott-Rodino Act. The company currently expects that the acquisition will close during Eagle’s third fiscal quarter of the current year.

Eagle Materials manufactures and distributes cement, Gypsum wallboard, recycled paperboard, concrete and aggregates, and oil and gas proppants from 40 US sites.

Source

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