Fort Worth, Texas-based FTS International Inc. agreed to sell itself on Oct. 22 to privately held ProFrac Holdings LLC in an all-cash transaction the company said will create one of the largest completions focused service companies in the U.S. oil and gas industry.

An independent hydraulic fracturing service company and one of the only vertically integrated service providers of its kind in North America, FTS took a hit last year from the pullback in U.S. shale activity in response to the COVID-19 pandemic driven downturn, forcing the company to voluntarily file for bankruptcy protection. However, by November 2020, FTS had emerged from the restructuring process debt-free and ready to take advantage of future opportunities.

“The board and executive leadership team have carefully evaluated a range of strategic alternatives focused on maximizing value and determined that this cash offer from ProFrac, which provides immediate and certain value at an attractive price, is in the best interest of all stockholders,” Eugene Davis, chairman of the FTS board, commented in the release.

Under the terms of the agreement, FTSI stockholders will receive $26.52 per share of FTSI common stock in cash. The all-cash transaction values FTSI at approximately $407.5 million. Further, ProFrac’s offer represents approximately a 14% premium over FTI’s 60-day volume-weighted average closing share price, according to the company release.

In addition to creating a stronger organization that will enable FTS to “successfully compete in our rapidly evolving industry,” FTS Board Chairman Davis also noted that the agreement with ProFrac includes a 45-day “go-shop” period that allows the FTS board and its advisers to solicit alternative acquisition proposals from third parties.

“This transaction is the result of a thoughtful analysis of FTSI’s best long-term position for stockholders,” he continued. “At the same time, our board recognizes industry dynamics remain fluid and believes that the 45-day ‘go-shop’ provides us the optimal structure to execute this transaction.” 

Headquartered in the Dallas-Fort Worth area, ProFrac is a leading oilfield services company focused on providing top-of-the-line, high-pressure pumps and “the toughest frac equipment” crafted for longer-laterals and multiwell pads. The company was formed in May 2016 with a veteran leadership team led by CEO Ladd Wilks that had previously transformed a start-up into the world’s largest private pressure pumping company, according to its company website.

“We have long respected FTSI and the people that have guided them through the past few years to the position of strength they are in today,” ProFrac CEO Ladd Wilks said in the Oct. 22 release. “Together, these two organizations, which share an employee-centric vision and approach to operating in a dynamic industry, will create the scale needed to deliver the reliable, efficient and technology-led service our customers need.”

The combination of FTS and ProFrac will provide improved through-cycle resiliency via enhanced expertise, technology and scale, added FTS CEO Michael Doss.

“The combination of these two companies creates a leading completions focused company that will be in a better position to succeed through cycles, deliver the best level of service to our customers and retain the industry’s best talent,” Doss said.

The transaction with ProFrac is expected to close first-quarter 2022, subject to customary closing conditions, including approval by FTS stockholders and receipt of regulatory approvals. The FTS board has unanimously approved the agreement with ProFrac and recommends that FTS stockholders vote in favor of the transaction at the special meeting of stockholders to be called in connection with the transaction.

FTS International’s obligation to close the transaction is also conditioned upon approval by a majority of the company’s stockholders, excluding its largest stockholder THRC Holdings, which is an affiliate of ProFrac. 

Upon closing of the transaction, FTS common stock will no longer be listed on any public market.

The  45-day “go-shop” period included in the transaction agreement expires Dec. 5. FTSI does not intend to disclose developments with respect to the solicitation process unless and until it determines such disclosure is appropriate or otherwise required.

Ducera Partners LLC is financial adviser to FTS for the transaction and Davis Polk & Wardwell LLP is its legal counsel. Piper Sandler & Co. is serving as financial adviser to ProFrac and Vinson & Elkins LLP is its legal counsel.

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