Proppant Powerhouse US Silica Bought by Apollo Global for $1.85 Billion

The second major deal in the US proppant industry this year will see US Silica go forward as a private company.

Sandbox containers can hold up to 22.5 tons of sand which reduces proppant logistics challenges and mitigates the silica particles that are released into the air at the wellsite.
Source: US Silica.

Proppant provider US Silica announced this month its acquisition by the New York City-based investment firm Apollo Global Management. The deal, valued at $1.85 billion in cash, will offer US Silica shareholders $15.50 per share—an 18.7% premium over the closing share price of $13.06 on 25 April 2024.

Post-acquisition, US Silica will continue operations under its established name and maintain its current executive team, including CEO Bryan Shinn, in the Houston area. Shinn expressed optimism about the company's new chapter, stating, "Our ability to take this step from a position of strength is a testament to this excellent foundation and the dedication of our employees. I'm incredibly excited about the path ahead."

Founded 124 years ago, US Silica commands a significant role in the North American tight oil and gas industry, selling over 13 million tons of proppant last year. The company owns 26 mines and other facilities and acquired proppant logistics provider Sandbox Enterprises in 2016 in a deal valued at $218 million.

In its latest financial results for the fourth quarter of 2023, US Silica reported a modest 2% increase in year-over-year sales, totaling $1.5 billion, while its net income soared by 88%, reaching $146.9 million. The company's net debt stood at $594 million at the end of 2023.

Additionally, US Silica announced during its last earnings call that as a public company it plans to shift the management of North White Sand sales from its oil and gas division to its industrial and specialty products unit.

The move reflects the trend among US shale producers switching to using local sands for proppant, which, despite lower crush strengths, offer cost-effective pricing and reduced logistical challenges.

The acquisition received unanimous approval from US Silica's board of directors and is anticipated to close in the third quarter of 2024, pending regulatory approvals. The deal includes a 45-day "go-shop" period that ends 10 June, a provision allowing US Silica to seek alternative acquisition proposals from third parties.

Apollo’s acquisition of US Silica marks the second major transaction in the proppant industry this year. In March, Atlas Energy Solutions announced it would buy rival North American proppant provider Hi-Crush Inc. for $450 million, giving it a combined production capacity of nearly 28 million tons annually.