Infrastructure service provider
Macquarie Infrastructure Company LLC
) recently inked a definitive agreement to acquire the remaining
50% stake of International-Matex Tank Terminals that operates 12
bulk liquid storage terminal facilities in North America. The
transaction, worth over $1 billion ($910.0 million in cash and
$115.0 million in stock), equates to International-Matex's
enterprise value of 10.7x trailing 12-month EBITDA of $279.6
In May 2006, Macquarie had acquired a 50% ownership stake in
International-Matex. By purchasing the remaining stake in the
company from the founders of the business, Macquarie will gain full
ownership control of International-Matex to strengthen its stable,
largely contracted revenue based business model.
Since its initial investment in 2006, International-Matex's EBITDA
has increased manifold from approximately $67.0 million in 2005 to
$279.6 million for the trailing 12-month period ended Mar 31, 2014.
The growth is primarily attributable to both pricing power and
deployment of additional capital in high ROI projects at the
business. On its part, Macquarie has actively participated in the
development of approximately $800.0 million worth of such projects
year-to-date and envisions further opportunity of additional growth
in the future through significant capital investments.
Being closely associated with the helm of the business for over
eight years, Macquarie has an in-depth knowledge of the inherent
strengths of the company on which it can capitalize to continue the
growth momentum. Macquarie also intends to implement better
controls and processes for expense management and capital
expenditure maintenance and leverage International-Matex's
consolidated procurement capability to gain added mileage.
The transaction will enable Macquarie to consolidate
International-Matex's results for its own financial reporting and
tax purposes for increased clarity and elimination of a double
layer of taxation. Post-acquisition, International-Matex will no
longer be required to pay federal taxes and Macquarie will no
longer pay tax on distributions received from it in excess of the
Federal Dividends Received Deduction amount.
The transaction is expected to be accretive to Macquarie's free
cash flow in 2014, increasing 11.2% year over year to $4.55 per
share (excluding transaction-related expenses). The company also
introduced free cash flow guidance for 2015 at $5.10 per share,
representing year-over-year growth of 12.1%. Since 2007, free cash
flow per share in Macquarie has grown by 12.3% each year on an
The company intends to distribute this cash as dividends as it
targets a payout between 80% and 85% of the free cash flow.
Macquarie immediately raised its second-quarter 2014 dividend to 95
cents per share or $3.80 annualized, up 1.3% year over year. For
additional liquidity, Macquarie also put in place a $250.0 million
revolving credit facility.
The acquisition will likely offer an opportunity to improve
operations, business development, commercial and support
capabilities at International-Matex in addition to improved
efficiency in allocation of capital for higher growth
opportunities. The transaction is expected to close in late July,
subject to the fulfillment of the mandatory closing conditions and
Macquarie owns and operates a diversified group of infrastructure
businesses in the U.S., including a gas processing and distribution
business, Hawaii Gas, several entities comprising a Contracted
Power and Energy segment, and International-Matex. The company also
owns and operates an airport services business titled Atlantic
Macquarie presently has a Zacks Rank #3 (Hold). Some better-ranked
stocks in the industry include
Compass Diversified Holdings
), each of which carry a Zacks Rank #2 (Buy).
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