AUSTIN - Atlas (NYSE:ATCO) Energy Solutions Inc. (NYSE: AESI), a leader in the proppant and logistics industry, has announced the acquisition of Hi-Crush Inc.'s Permian Basin proppant production assets and North American logistics operations in a deal valued at $450 million. The transaction is structured to include $150 million in cash, $175 million in Atlas common stock, and $125 million in deferred cash payments.
This acquisition is expected to create a combined pro forma production capacity of approximately 28 million tons, with about 80% of the 2024 capacity already contracted. This move is anticipated to accelerate free cash flow generation and enhance shareholder returns. Atlas also expects the acquired assets to contribute between $110 million and $125 million in Adjusted EBITDA in 2024.
The combination of Atlas's and Hi-Crush's operations is estimated to yield over $20 million in annual synergies by 2026 and is projected to be immediately accretive to cash flow per share (CFPS) and earnings per share (EPS). The transaction also expands Atlas's logistics capabilities by incorporating Pronghorn, a multi-basin provider of proppant logistics and wellsite services.
Bud Brigham, Executive Chairman and CEO of Atlas, expressed enthusiasm about the merger, highlighting the combined efforts to drive efficiencies in proppant and logistics as beneficial for shareholders. Dirk Hallen, CEO of Hi-Crush, also remarked on the transformative potential of the merger for the industry, employees, customers, and shareholders.
The transaction is expected to close by the end of the first quarter of 2024. Atlas intends to fund the cash portion of the purchase price through a combination of debt facilities and the issuance of common stock.
This strategic acquisition is based on a press release statement.
InvestingPro Insights
Atlas Energy Solutions Inc. (NYSE: AESI) has made a significant move with the acquisition of Hi-Crush Inc.'s assets, reflecting a strategic expansion and financial growth potential. To provide a deeper analytical perspective, here are some key metrics and insights from InvestingPro:
InvestingPro Data highlights include a robust revenue growth of 61.44% over the last twelve months as of Q3 2023, showcasing the company's strong top-line performance. The P/E Ratio stands at 7.45, indicating a potentially undervalued stock compared to industry peers. Furthermore, the company's operating income margin of 46.11% during the same period signifies efficient management and profitability potential.
InvestingPro Tips for Atlas Energy Solutions Inc. suggest a solid financial foundation, with the company holding more cash than debt on its balance sheet, and liquid assets that exceed short-term obligations. This financial stability is crucial for Atlas as it undertakes the substantial acquisition of Hi-Crush Inc.'s assets. Moreover, analysts predict that the company will be profitable this year, which aligns with the anticipated accretive nature of the transaction to the company's cash flow per share (CFPS) and earnings per share (EPS).
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