Tag Archives: M&A

Houston healthcare company goes public via reverse takeover

Nutex Health, a Houston-based operator of micro-hospitals, has gone public via a reverse takeover with Florida-based Clinigence Holdings.



Nutex owns and operates 14 facilities, with another 17 under construction. The hospitals offer emergency room care, inpatient care and behavioral health services. Most of the hospitals have less than 10 beds. Some of the hospitals are 100% owned by Nutex. Others are partly owned by physicians who provide services at that hospital.

Nutex was founded in 2011 by Chairman and CEO Tom Vo, M.D. The company has its head office in the Galleria area. It plans to open 100 micro-hospitals across the USA.

Clinigence started out as a healthcare information technology company. However, in early 2021, it pivoted to acquire AHP Health Management Services, which provides care for 22,000 patients in Los Angeles, though a network of 141 primary care physicians and 660 specialists.  AHP receives a fee per member, per month. Its shares were traded over-the-counter, but following the merger, the shares now trade on Nasdaq.

Nutex is forecasting revenues of $366 million for 2022 and an adjusted EBITDA of $201 million. In the merger it was valued $1.6 billion.

The CFO of the company will be Mike Bowen. He is based in Florida and has been the CFO of Accountable Healthcare America (AHA) since 2014. AHA, a medical management platform company, was acquired by Clinigence the same day it acquired AHP.

SEC filing – Nutex Health merger

E&P companies to combine in $6 billion transaction

Two E&P companies, Oasis Petroleum and Whiting Petroleum are merging in a $6 billion deal, including debt. Oasis is based in downtown Houston, while Whiting has its head office in Denver. The combined company will have its head office in Houston and will have a new, yet-to-be-determined name. The Denver office will remain open for the foreseeable future.



Both companies have their main operations in the Williston Basin of North Dakota, Montana and Saskatchewan. (The Bakken is the main oil-producing rock formation of the Basin, but there are others). In terms of acreage, the deal combines the number 3 and 4 players into the largest operator in the Basin, ahead of Continental Resources and ConocoPhillips.

Both companies filed for pre-packaged bankruptcies in 2020. Whiting filed first, in April 2020 and exited in September 2020, having converted $2.4 billion of debt into equity. Likewise, Oasis filed in September 2020 and exited three months later. It converted $1.9 million of debt into equity.

After exiting bankruptcy, Oasis sold its Permian Basin acreage for more than $400 million and bought assets in the Williston Basin from Diamondback Energy for $745 million.

Management

Both companies have CEOs who were appointed after exiting Chapter 11. Lynn Peterson, the CEO of Whiting, was appointed in September 2020. He will become Chairman of the combined company. Danny Brown, CEO of Oasis, joined in April 2021. Previously, he was head of US onshore operations for Anadarko. Mr. Brown will be the CEO of the combined company.

Longtime Oasis CFO Michael Lou will be the CFO of the combined company.

Transaction structure

The deal is a combined stock and cash deal. Oasis is the surviving entity and its shareholders will get a special dividend of $15 a share. Whiting shareholders will get 0.5774 shares of Oasis and $6.25 in cash for each share of Whiting they own. Once the deal closes later this year, Whiting shareholders will own about 53% of the combined company.

The company expects to achieve savings of $65 million by the end of 2023. $30 million will come from administrative savings, the rest will come from operational cost synergies.

Oasis – Whiting Investor Presentation

Exterran Corporation to be acquired for $735 million

Houston-based Exterran Corporation has agreed to be bought by Enerflex in an all-stock transaction that values the company at $735 million.



The contract combines two businesses that are primarily involved in natural gas processing and compression services, including manufacturing, service and contract operations.

Enerflex shareholders will own approximately 73% of the combined business which will continue to be run from Calgary by the Enerflex management team.

The predecessor business to Exterran was formed in 1954 as South Coast Gas Company and later operated as Hanover Compressor Company and Universal Compression. In 2007, these two businesses merged to form Exterran Holdings. In 2015, the manufacturing and international compression businesses were spun off. The spin off was named Exterran Corporation, while the US compression business was renamed Archrock.

At the time of the spin-off, Exterran shares traded at $18. Before the takeover announcement, the stock was trading at $3. The company has struggled in recent years as E&P operators cut back on capital expenditures and the company was burdened with $525 million of debt at spin-off.

Enerflex expects to achieve $40 million of annualized savings. $35 million will come from restructuring the management and corporate support teams.

Assuming the Exterran management leave after the deal closes (expected in Q2 or Q3 this year) they will receive large payouts. CEO Andrew Way is in line for a cash severance of $6.1 million (3x base plus 3x  target bonus). Accelerated vesting of options will be worth another $3.3 million.

CFO David Barta will receive $1.9 million in cash severance (2x base plus 2x target bonus). His options will be worth $0.7 million.

https://www.enerflex.com/uploads/Presentations/Investor-Presentation-Enerflex-to-Acquire-Exterran.pdf

Diamond Offshore fails to attract satisfactory takeover offers

Diamond Offshore will remain independent after failing to attract any satisfactory takeover offers. The company had put itself up-for-sale back in August and hired Goldman Sachs as its financial advisor.



The offshore driller owns four drillships and nine semisubmersibles. It exited bankruptcy in April 2021, having converted $2 billion of debt into equity. Its stock is not currently publicly-traded.

As part of the sale process, the company approached four offshore drilling companies that had sufficient scale to acquire Diamond and were not in bankruptcy (isn’t that all of them?).

  • Company A submitted an indicative offer that was deemed inadequate. When asked to raise their bid, they walked away.
  • Companies B, C and D submitted indicative bids that were deemed worthy of further engagement. After commencing limited due diligence, companies B and C backed out.
  • In November, in light of various communications from Company D, the independent committee appointed by Diamond decided it would cease discussions with Company D.

Litigation with largest shareholder

Interestingly, back in July, Avenue Capital Management, a hedge fund that is the largest shareholder of Diamond with a 17% shareholding, sued the company. It was trying to force the company to hold an annual meeting, at which Avenue would put forward its own nominees for directors. The company and Avenue settled the lawsuit in August. As part of the settlement, the company disclosed details of the proposed takeover offers to Avenue.

In November 2021, Avenue delivered to the company a purported list of nominees for the next annual meeting. The company notified Avenue that the nominations were invalid because they were not in accordance with the bylaws. After a second settlement agreement with Avenue in December, the litigation and the nominees proposed by Avenue were withdrawn.

AGM in January

An annual meeting of stockholders will now take place on January 21,2022. There are three directors up for re-election, namely;

  • Adam Peakes – former CFO at Noble
  • Patrick Lowe – former COO at Ensco (now part of Valaris)
  • John Hollowell – former CEO of Shell Midstream.

All three were part of the four-person independent committee that was set up to explore strategic alternatives.

SEC filing – Diamond Offshore takeover discussions

 

 

BP Midstream Partners to be acquired by its former parent

BP Midstream Partners (BPMP), based in west Houston, is to be re-acquired by its parent, BP, in an all-stock transaction. Each unitholder will receive 0.575 of an American Depositary Share of BP for each public common unit owned. At the current price of the ADRs, that amounts to $14.89 per unit

Back in August, BP offered to buy BPMP common units at $13.01 per unit. BP currently owns 54.4% of the outstanding BPMP units.

BPMP owns the pipelines and other midstream assets that service BP’s Gulf of Mexico’s fields as well as the pipelines around the Whiting refinery in Indiana.

BP Midstream was spun off by BP only in October 2017 at $18 per unit. That was a few years later than many of its competitors. In fact, the trend to re-acquire them started shortly thereafter in 2018.

The deal is expected to close in the first quarter of 2022.

SEC filing – BP to acquire BPMP

 

 

Houston robotics company to be taken public by SPAC

Nauticus Robotics, a Houston-based marine robotics company, is to be taken public by a CleanTech Acquisition Corp, a SPAC (Special Purpose Acquisition Corporation). The deal values Nauticus at $377 million enterprise value. CleanTech completed its $150 million IPO in July 2021.



Until recently, the company was called Houston Mechatronics. It was founded in 2014 by Nicholaus Radford, who previously worked at NASA and Oceaneering. The company has its head office in Webster, two miles from the NASA Johnson Space Center and employs about 25 former NASA robot engineers . Existing investors in the business include Schlumberger and Transocean. Angie Berka, the Director of Finance and Administration, is also a shareholder.

Currently, manned service vessels are used to service the offshore energy sectors. Nauticus is developing tetherless, autonomous electric-powered robots that can be controlled by staff onshore. The company plans to rent out its Aquanaut robot for $25,000-$50,000 a day, less than half the cost of a deepwater rig.

Nauticus also believes the technology can be used for other industries and applications such as ports (to monitor ship traffic), aquaculture (fish farming), offshore wind and data centers, and defence.

For 2021, the company has revenues of $8 million. This is projected to grow to $90 million in 2023 (4x enterprise value) and $202 million by 2024.

Existing shareholders including Schlumberger and Transocean are rolling over their shares. After the deal closes (expected in the second quarter of 2022) the company will have $222 million of cash on hand. $50 million of this will be used to execute the business plan, the rest will be placed in trust for future growth opportunities, including acquisitions.

SEC filing – 8-K

 

Houston water logistics company to be acquired

[UPDATE 02-23-22 – The deal has now closed.]

Select Energy Services has agreed to acquire another Houston-based company, Nuverra Environmental Services for $45 million in an all-stock transaction. In addition, Select will also assume $20 million of debt that Nuverra has.



Both companies are involved in the water treatment, recycling and disposal of water and chemicals produced on onshore shale basins in the US. Nuverra primarily operates in Bakken, Haynesville and the Marcellus basins.

The signs have been there that Nuverra was preparing itself to be sold, namely;

  • The company moved its head office from Arizona to Houston in August 2021.
  • Eric Bauer was hired in April 2020 on a three-year contract as interim CFO. He has an investment banking background.
  • Two investment firms (Gates and Ascribe) own 85% of the equity following the company’s bankruptcy reorganization in 2017.

Pat Bond was appointed CEO in April 2021. He abruptly left in September. Current chairman and former CEO Charles Thompson took over as CEO again.

Nuverra has revenues of approximately $100 million and has only generated an operating profit once (in 2014) in the past 11 years. In its bankruptcy reorganization, the company converted more than $400 million of debt into equity. Since exiting bankruptcy, Nuverra has cumulative losses of $225 million.

The transaction is expected to close in the first quarter of 2022.

https://www.prnewswire.com/news-releases/select-energy-services-enters-into-definitive-agreement-to-acquire-nuverra-environmental-solutions-and-closes-on-the-acquisition-of-the-us-onshore-assets-of-hb-rentals-301443074.html

Fertitta Entertainment tries to back out of deal with SPAC

[UPDATE 12-09-21 – The deal has now been terminated. FEI will pay the SPAC $6 million immediately and either a further $10 million if the SPAC completes a deal to take another company public or $16 million if they don’t.]

The transaction to take Fertitta Entertainment (‘FEI’) public via a SPAC has effectively collapsed. Although the deal is not officially dead, the two parties have exchanged letters blaming the other for the deal failing to complete by the proposed deadline.



The deal with Fast Acquisition Corp (‘FAST’), a blank check company was announced back in February. The transaction would have seen most of the assets owned by Tilman Fertitta go public (446 restaurants and 5 Golden Nugget Casinos). Mr. Fertitta would have ended up owning 59% after the deal closed.

The deal was expected to close by December 1, 2021. If the deadline passed, the merger agreement allowed either party to terminate the agreement. FEI sent a letter to FAST, stating it would abandon the transaction.

FAST sent a letter in response stating that FEI was not permitted to terminate the agreement because the primary reason for the failure was that FEI didn’t deliver audited financial statements for the year ended September 30, 2020 by March 31, 2021, the deadline in the original merger agreement. FEI’s audited financials were issued August 2, 2021.

Changing Terms

One problem that FAST had was that Mr. Fertitta kept changing the terms of the deal. In late May, FEI proposed adding a bunch of assets, such as certain Vic & Anthony Restaurants, and the Galveston Pleasure Pier, that were originally excluded from the deal.  FAST accepted the revised terms, which would mean that Mr. Fertitta would end up with 79% economic ownership post-close.

In August, the online gaming division of Golden Nugget (GNOG), announced it would merge with DraftKings. FEI own 80% of GNOG, which is publicly-traded. Although that stake was part of the transaction with FAST, the management of FAST were not aware of the deal prior to the announcement.

It’s not clear why the deal has collapsed but Mr. Fertitta holds all the chips in the deal and clearly thinks he has better options elsewhere.

What is curious about the spat is that the two sides amended the merger agreement on June 1 to reflect the additional assets being added. However, there was no mention of a revised date for the financial statements, even though that deadline had come and gone.

FAST may have to liquidate

With the pending collapse of the deal, the management of FAST will have to complete an acquisition by August 2022, otherwise it will have to liquidate its operations and return the $200 million IPO proceeds to shareholders.

SEC filing – 8-K

 

Goodrich Petroleum to be taken private by Encap Investments

Goodrich Petroleum, an E&P company based in downtown Houston, is to go private after agreeing to be acquired by an affiliate of Encap Investments for $23 per share. Including the assumption of debt, the transaction is valued at $480 million.



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Goodrich was formed in 1975 and went public via a reverse takeover of Patrick Petroleum in 1995. The company primarily owns gas producing wells in the Haynesville Basin.

The company filed for bankruptcy in 2016 during which lenders wrote off $426 million in debt in exchange for most of the equity in the successor company.

Encap Investments is a Houston-based investment firm. It will buy Goodrich using a $7 billion fund raised in 2017.

The offer price represents an approximately 7% premium to the closing price of the stock on November 19, 2021. Certain stockholders have agreed to support the deal. In addition, there is $32.5 million of 13.5% loan notes that can convert to equity at $21.33. Taking the conversion into account, more than 50% of shareholders support the deal.

The deal is expected to close in December 2021.

[UPDATE 11-23-21 Gen IV Investments who were the second largest shareholder (~12%) sold their shares to EnCap. Frankin, the largest shareholder (15%) and Anchorage Capital Group (10%) tendered their shares in support, in addition to the senior management (12%). These percentages exclude the shares that their parties own from the convertible notes.]

SEC filing – Goodrich going private

Spirit of Texas Bank to be acquired for $581 million

Spirit of Texas Bancshares, based in Conroe, has agreed to be acquired by Simmons First National Corporation, in a transaction worth $581 million. [UPDATE 04-08-22 – The deal has now closed.]

Spirit of Texas Bank operates 37 branches, primarily in the Texas triangle between Houston, Dallas-Fort Worth and San Antonio.



Simmons, based in Arkansas, operates 209 branches, but only 23 in Texas, around Dallas/Fort Worth and towns north of there.  It did have five locations in Austin and San Antonio but sold them to Spirit in February 2020 for $131 million. Simmons has been on an acquisition spree recently. Just last month, the company completed the acquisitions of two Tennessee-based banks for $278 million.

Spirit of Texas started in 2008 by acquiring First Bank of Snook in College Station. It went public in May 2008, raising $42 million. That valued the bank at around $200 million. It has made four  acquisitions since going public.

Founder and CEO of Spirit, Dean Bass, will retire and join the Simmons board as an independent director.

Two weeks ago, two Houston-based banks, Allegiance and CBTX, announced a $1.5 billion merger.

Both transactions are expected to close in the second quarter of 2022.

Simmons Spirit acquisition – investor presentation