Cactus to Acquire FlexSteel Technologies Holdings

Posted on 01/03/2023

Cactus, Inc. (NYSE: WHD) designs, manufactures, sells and rents a range of highly-engineered wellhead and pressure control equipment. Its products are sold and rented principally for onshore unconventional oil and gas wells and are utilized during the drilling, completion and production phases of its customers’ wells. In addition, it provides field services for all its products and rental items to assist with the installation, maintenance and handling of the wellhead and pressure control equipment.

Cactus entered into a definitive agreement to acquire FlexSteel Technologies Holdings, Inc. and its affiliates through a merger with its holding company, HighRidge Resources, Inc. (FlexSteel) and Atlas Merger Sub, LLC, a newly formed subsidiary of Cactus, Inc. FlexSteel is a manufacturer of spoolable pipe technologies primarily purchased by customers during the production phases of a well’s lifecycle.

Cactus is acquiring FlexSteel on a cash-free, debt-free basis, for total upfront consideration of approximately US$ 621 million, subject to customary purchase price adjustments. The closing is expected to occur in early 2023 and is subject to regulatory approvals and other customary conditions. In addition to the upfront consideration, there is a potential future earn-out payment of up to US$ 75 million to be paid in mid-2024 if certain revenue growth targets are met by FlexSteel. FlexSteel’s current President and CEO, Thirucherai Sathyanarayanan, will continue to lead the business, which generated revenue of approximately US$ 265 million for the nine months ended September 30, 2022.

Cactus has obtained fully committed bridge financing that it can use to fund the upfront purchase price together with cash on hand. Cactus intends to finance the acquisition of FlexSteel through a mix of cash, debt, and/or equity.

J.P. Morgan Securities LLC is serving as the exclusive financial advisor to Cactus and Bracewell LLP is serving as legal counsel in association with the transaction. Morgan Stanley & Co. LLC is serving as financial advisor to FlexSteel and Vinson & Elkins LLP is acting as legal counsel on the transaction.

Cactus operates service centers in the United States, which are strategically located in the key oil and gas producing regions, including the Permian, SCOOP/STACK, Marcellus, Utica, Haynesville, Eagle Ford and Bakken, among other areas, and in Eastern Australia.

Keywords: Cactus Wellhead, LLC.

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