AROC - Blog Exposure - Archrock Acquires Outstanding Stake in Archrock Partners for $607 Million
LONDON, UK / ACCESSWIRE / January 04, 2018 / Active-Investors.com has just released a free research report on Archrock Partners, L.P. (NASDAQ: APLP). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/?symbol=APLP as the Company's latest news hit the wire. On January 02, 2018, Archrock, Inc. (NYSE: AROC) ("AROC") announced that it has signed an agreement to acquire all outstanding shares of Archrock Partners, L.P., which it does not already own. The all-stock deal is valued approximately $607 million. Register today and get access to over 1000 Free Research Reports by joining our site below:
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Active-Investors.com is focused on giving you timely information and the inside line on companies that matter to you. This morning, Archrock Partners L.P. and Archrock, Inc. most recent news are on our radar and our team decided to put out fantastic reports on these companies that are now available for free below:
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The merger will lead to the formation of one of the largest outsourced provider of natural gas compression services in US and will result in a combined entity with an enterprise value of approximately $2.8 billion.
Commenting on the acquisition of outstanding stake in Archrock Partners, Brad Childers, President and CEO of AROC, said:
"We believe the combination of Archrock and Archrock Partners will enhance our cash available for dividend coverage, improve our credit profile, simplify our capital structure, and lower our cost of capital. Additionally, our increased retained cash flow will better position us to continue to invest in our robust opportunity set of growth projects and significantly reduce our need for equity capital. We believe this transaction is attractive for our stockholders and unitholders, as it will improve our platform to capture the next leg of growth in the US natural gas compression market."
Transaction details
As per the terms of the agreement, AROC has agreed to offer 1.4 AROC's shares for each common unit of Archrock Partners, which it is acquiring. The transaction represents a 23.4% premium of the closing price of Archrock Partners' common unit on December 29, 2017. AROC is acquiring approximately 41.3 million outstanding common units of Archrock Partners as per this rate. Following the close of the transaction, the common units of Archrock Partners will cease to be traded publicly. AROC plans to issue approximately 57.8 million of its shares to complete the transaction. These shares represent approximately 44.9% of the total shares of the merged entity. As a result of this transaction, the payment of the incentive distribution rights in Archrock Partners will be discontinued on completion of the deal.
The deal was approved by the conflicts committee of the Board of Directors as well as the Board of Archrock Partners. The conflicts committee consisted of independent members of Archrock Partners' Board. The deal has also been approved by the Board of Directors of AROC.
The transaction is expected to be completed by end of Q2 2018 and is subject to receiving approvals from regulators and shareholders of both companies as well as other closing conditions.
Benefits of the transaction
The deal is expected to be immediately accretive to AROC. The merged entity is expected to have strong financials and cash flows to support payments of dividends till 2020. In fact, the available cash will be twice the dividend coverage ratio. The management of AROC plans to recommend to its Board to consider a 10% increase in the first full quarterly dividend payable on completion of the transaction. The management of AROC expects the annual dividend growth rate to be in the range of 10% to 15% till 2020.
The deal is expected to be beneficial for the stakeholders of both AROC and Archrock Partners, as the merged entity is expected to have a larger size, have strong equity trading liquidity and the ability to raise funds at a lower cost for funding projects for the future growth of the merged company. Additionally, AROC will have major tax benefits on completion of the transaction and expects that it will not have to pay any cash federal income taxes at least till FY23.
About Archrock, Inc. and Archrock Partners, L.P.
Houston, Texas-based AROC is a pure-play US natural gas contract compression services company. It also provides aftermarket services to customers that own compression equipment. AROC was formed in 2015 when Exterran® separated its global product line and non-US compression rental and compression full services businesses from its US contract compression services operations. AROC has presence across major oil and gas producing regions in US and has approximately 1,700 employees.
AROC owns interests in Archrock Partners, L.P., a master limited partnership and the leading provider of natural gas compression services to customers throughout the US.
Stock Performance Snapshot
January 03, 2018 - At Wednesday's closing bell, Archrock Partners' stock fell 1.37%, ending the trading session at $13.67.
Volume traded for the day: 1.30 million shares, which was above the 3-month average volume of 146.81 thousand shares.
Stock performance in the last month — up 17.04%; and year-to-date - up 14.78%
After yesterday's close, Archrock Partners' market cap was at $949.79 million.
The stock has a dividend yield of 8.34%.
The stock is part of the Basic Materials sector, categorized under the Oil & Gas Equipment & Services industry. This sector was up 1.1% at the end of the session.
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