Why Industrial Minerals Company U.S. Silica Shares Are Rocketing Today

U.S. Silica Holdings, Inc. SLCA shares are trading higher after the company inked a deal to be acquired by funds managed by affiliates of Apollo Global Management, Inc. APO for around $1.85 billion.

M&A Deal: As per the deal, U.S. Silica shareholders will receive $15.50 per share in cash for each share they own, representing an 18.7% premium to its closing share price as of $13.06 on April 25 and a 33.0% premium to 90-day volume-weighted average share price for the period ended April 25. 

The transaction is expected to close in the third quarter of 2024, subject to customary closing conditions. The agreement includes a 45-day “go-shop” period that will expire on June 10.

Post deal completion, the company will no longer be listed on the New York Stock Exchange, and will become a private company. 

Bryan Shinn, Chief Executive Officer, said, “By partnering with Apollo Funds, we gain significant resources, deep industry expertise and enhanced flexibility as a private company to pursue the many market opportunities in front of us and invest in innovative capabilities that enable value-added offerings for customers.”

Earnings: Also, the company reported first-quarter FY24 results, with adjusted EPS of $0.20, in line with the consensus, and sales of $325.9 million missed the consensus of $336.6 million.

Total tons sold declined 17% Y/Y to 4.092 million in the quarter. 

Operating cash flow stood at $40.9 million, and capital expenditures came in at $12.4 million in the quarter. 

As of March-end, the company had cash and cash equivalents of $234.5 million and total debt of $809.5 million.

Shinn added, “In our Oil & Gas segment, volumes were up 5% sequentially, although our margins were impacted by slightly lower pricing, driven in part by lower natural gas prices.”

Investors can gain exposure to the stock via Invesco S&P SmallCap Energy ETF PSCE and SPDR Series Trust SPDR S&P Oil & Gas Equipment & Services ETF XES.

Price Action: SLCA shares are up 20.2% at $15.70 at the last check Friday.

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