U.S. Silica (SLCA) Enters an All-Cash Deal With Apollo Funds

U.S. Silica Holdings SLCA, a producer of commercial silica utilized in various industrial applications and a logistics service provider to the oil and gas industry, has announced that it will be acquired in an all-cash deal by funds managed by affiliates of Apollo, a prominent global investment firm. The transaction will value SLCA at an approximate enterprise value of $1.85 billion.

In the announcement, U.S. Silica mentioned that its shareholders will receive $15.50 in cash per share of common stock owned at the time of the deal’s closure. The purchase price of $15.50 presents a premium of 18.7% over the closing price of U.S. Silica’s shares on Apr 25, 2024. Following the closure of the transaction, the company will go private. It will be delisted from the New York Stock exchange.

However, U.S. Silica will continue to operate under the same name and brand, even after going private. The company will be led by its current CEO and executive team. The deal is expected to be closed in the third quarter of 2024, subject to customary closing conditions.

The agreement also includes the provision of a 45-day “go-shop” period until Jun 10, 2024. During this time, U.S. Silica and its financial advisor can actively seek alternative investment proposals from third parties.

U.S. Silica has stated that this acquisition will provide shareholders with a compelling cash value for their shares. The company believes that its partnership with Apollo funds will allow it to gain access to significant resources, deep industry expertise and enhanced flexibility as a private entity. By leveraging these, the company will be able to pursue the market opportunities presented to it and invest in innovative capabilities that enhance its value-added offerings for customers.

Zacks Rank and Key Picks

Currently, SLCA has a Zacks Rank #5 (Strong Sell).

Some better-ranked stocks in the energysector are SM Energy SM, Hess Corporation HES and Sunoco LP SUN. SM Energy and Hess presently sport a Zacks Rank #1 (Strong Buy) each, while Sunoco carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

SM Energy is an upstream energy firm operating in the prolific Midland Basin region and the South Texas region. For 2024, the company expects its production to increase from the prior- year reported figure, signaling a bright production outlook.

Hess is a leading upstream energy company, with its operations focused on the prolific resources offshore Guyana. The company has made significant oil discoveries in the Stabroek Block, off the coast of Guyana. These discoveries have totaled more than 11 billion barrels of oil equivalent in gross recoverable resources, adding to Hess’ production potential.

Sunoco LP is one of the largest distributors of motor fuel in the United States. The partnership distributes fuel to independent dealers, commercial customers, convenience stores as well as distributors. Its current distribution yield is greater than that of the composite stocks in the industry, providing unitholders with consistent returns.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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