U.S. Silica Holdings Inc. announced an agreement to acquire a leading regional sand producer for approximately $210 million. The acquisition of the NBR Sand unit of the privately owned New Birmingham Inc. is expected to close in August 2016, subject to certain adjustments at closing. The transaction will be funded using a combination of cash on hand (57 percent) and restricted stock (43 percent).
The business, located in Tyler, Texas, operates a single sand mine and plant that has the capacity to produce just over two million tons of fine-grade frac sand per year. The east Texas facility currently sells its products FOB the plant to customers that are primarily drilling and completing wells in the nearby basins. Once completely integrated into U.S. Silica's market-leading operating, sales and distribution platforms, the company anticipates the acquisition is expected to generate EPS accretion of $0.20 to $0.30 in 2017.
Bryan Shinn, president and chief executive officer of U.S. Silica, said, "This accretive acquisition adds to our capacity and product offering for the growing regional sands market, increasing our ability to effectively satisfy our customer's needs. We expect to unlock the full potential of this excellent mine by utilizing our strong customer relationships and powerful distribution network. We believe demand for regional sands will continue to grow as a cost effective proppant option for many completions and this is another important step to position U.S. Silica as a leader in the regional sand market."
Shinn added, "Our team continues to work diligently to identify and close additional attractive, highly accretive acquisitions that are aligned with our corporate strategy. We have a strong pipeline of opportunities that will help our customers meet their goals in an environment with potentially surging sand proppant demand as energy markets recover."
The NBR Sand unit produces 40/70 mesh and 100 mesh silica sand. The low-cost, state-of-the-art facility is on approximately 1,400 acres near Interstate 20. It includes 12 storage silos with capacity of more than 10,000 tons and five load-out lanes. The property has more than 20 years of quality reserves.