U.S. Silica acquires EP Minerals for $750 million

By U.S. Silica Holdings Inc. | March 26, 2018

U.S. Silica Holdings Inc. last week announced a definitive agreement to acquire EP Minerals for $750 million in cash.

EP Minerals–with sales of more than $200 million–is a global producer of engineered materials derived from industrial minerals including diatomaceous earth (DE), clay (calcium bentonite) and perlite.  The company is the No. 1 or No. 2 player in each of its global markets.

Similar to U.S. Silica's Industrial and specialty products (ISP) segment, it has transformed from a commodity-based business by adding new, value-added, higher-margin products to its mix, developing more than 50 innovative new products in the last three years with 40-plus products in its new development pipeline today.

''EP Minerals checks all of the boxes in terms of what we've been looking for in an attractive, adjacent business to our ISP segment,'' said Bryan Shinn, president and CEO. ''It is a rare find with an attractive market structure and has industry-leading margins with exciting opportunities to grow sales. It has strong IP protection and leverages our core competencies as a premier surface mining and logistics company. EP Minerals' reliable cash flow also complements our oil and gas segment while providing a robust platform for expansion and growth through organic opportunities and strategic bolt-on acquisitions."

EP Minerals' unique industrial minerals are used as filter aids, absorbents and functional additives for a variety of industries including food and beverage, biofuels, recreational water, oil and gas, farm and home, landscape, sports turf, paint, plastics, and insecticides.

The company's facilities are located in Nevada, Oregon, Nebraska, Tennessee, Alabama and Mississippi.

''We look forward to joining forces with U.S. Silica and benefiting from the strength of the company's mining expertise, differentiated logistics capabilities and ability to capture value throughout the supply chain,'' said Gregg Jones, president and chief executive officer of EP Minerals. ''I also believe that there will be opportunities for our two companies to collaborate on research and development efforts with our full R&D team helping to bring new products for both companies to market faster.''

U.S. Silica's ISP business remains on track for substantial growth through expansion of base business pricing and volume, acquiring bolt-ons in attractive, adjacent markets, and by developing and marketing new, value-added, higher margin products. U.S. Silica will finance the transaction and refinance its current debt through a new seven year, $1.280 billion committed Term Loan B credit facility and an expanded $100 million revolving credit facility.

The transaction is expected to be accretive in the fourth quarter of 2018 and is expected to close in the second quarter of 2018.

Centerview Partners LLC served as investment banking advisor and Baker Botts L.L.P. served as legal advisor to U.S. Silica. The Valence Group provided a fairness opinion to U.S. Silica's board of directors.