Superior Plus to acquire Certarus in $1.05 billion deal

January 20, 2023 By    

Superior Plus Corp. and Certarus Ltd. entered into a definitive agreement for Superior to acquire Certarus, a North American low carbon energy solutions provider, for a total acquisition value of $1.05 billion.

Under the terms of the acquisition, Superior will acquire all of the outstanding common shares of Certarus, representing an equity value of $853 million, and assume Certarus’ outstanding senior bank credit and leases, with a total value of $196 million. The Certarus shareholders will receive $353 million in cash and $500 million of Superior common shares priced at $10.25 per share, representing about 17 percent pro forma ownership.

“The acquisition of Certarus is a highly strategic and transformative transaction for Superior as it represents an exciting opportunity for significant organic growth and provides our existing and new customers with the ability to meet their ESG goals through our low carbon energy distribution platform,” says Luc Desjardins, Superior’s president and CEO. “With our execution on the Superior Way Forward strategic initiatives in the past 24 months, we are ahead of our timing to achieve $700 million to $750 million in EBITDA from operations as we now expect to reach the lower end of the target by 2024.”

Certarus is a North American distributor of over-the-road low carbon fuels, including compressed natural gas, renewable natural gas and hydrogen. Through the use of mobile storage units, Certarus delivers low cost and low carbon intensity energy alternatives to its customers. Certarus’ mobile storage units are interchangeable between compressed natural gas, renewable natural gas and hydrogen, giving Certarus flexibility to service its customers across North America as they transition away from diesel and other distillates. Certarus provides a virtual pipeline to its customers that do not have infrastructure in place or are in need of supplemental infrastructure. Revenue is generated from fees for service to provide its lower cost and lower carbon intensity fuels, directly passing on changes in the commodity cost of its fuels to customers.

Curtis Philippon, Certarus’ president and CEO adds: “We are excited to be joining the Superior team. Certarus will benefit from Superior’s scale, portable fuel distribution expertise and a shared commitment to safety. The joining of our businesses creates a strong platform upon which we can continue to grow and provide decarbonization solutions, including renewable natural gas and hydrogen.”

Certarus has 18 hubs throughout Canada and the U.S. and expects to have 640 mobile storage units by year-end, with about 85 percent of its revenue generated in the U.S. From 2020 to 2022, Certarus has grown the number of mobile storage units by 37 percent and the volume of low carbon fuels delivered by about 76 percent to 57,000 MMBtu/d. Over the same period, Certarus has more than doubled its adjusted EBITDA, with expected 2022 adjusted EBITDA of $124 million, driven by continued volume and efficiency improvements.

“We are thrilled to partner with Curtis and the team at Certarus,” says Angelo Rufino, Brookfield Special Investmens’s nominee on Superior’s board of directors and a member of Superior’s ad hoc committee to evaluate Certarus. “Certarus’ low carbon and alternative fuel distribution platform provides an exciting new organic avenue of growth for Superior Plus and will further assist our core customers as they transition to a lower carbon future.”

The transaction has been unanimously approved by the board of directors of both Superior and Certarus. The acquisition is expected to close in the first quarter of 2023, subject to customary closing conditions, including receipt of at least 66 2/3 percent of the votes cast by Certarus shareholders at a special meeting expected to take place in February 2023 and receipt of required regulatory, court and stock exchange approvals.

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