Please email ft@mergermarket.com or call EMEA: + 44 (0)20 7059 6105 Americas: +1 212 686-5277 Asia-Pacific: +852 2158 9730 for further information on mergermarket and how to receive more articles like the one below.
--------------------------------------------------------------------------------------------------------
Oglebay Norton, the industrial minerals and aggregates company, could divest from its sands segment to pay down debt and finance future acquisitions, said a top shareholder and a sector banker.
The two said that the most likely divestiture within Oglebay’s sands segment could be in their Frac Proppant Sands operations. Those operations mine, process and distribute sands for energy and industrial applications, including oil and gas production, building materials, industrial fillers, foundries and abrasive blasting, according to the company.
The shareholder and the sector banker said Oglebay’s Frac Proppant Sands operations are highly desirable, and could go for a high multiple – a multiple that the banker and an industry analyst said could be as high as 10 or 11 times EBITDA. The shareholder and industry banker said that Oglebay could likely look to divestitures to finance possible future acquisitions, particularly in its lime-related operations.
Oglebay CEO Mike Lundin told this news service earlier this month that the company has recently discussed acquisitions with JP Morgan. Oglebay declined comment on any possible divestitures.
The shareholder said that Martin Marietta Materials, the North Carolina-based producer of aggregates, concrete, and cement would be a logical acquirer because they are a competitor in aggregates. ”I could see them being an interested buyer in sand,” the shareholder said. He also said that the Alabama-based Vulcan Materials could also be a likely acquirer of divestitures from Oglebay’s sands operations.
The sector banker said that zoning and other regulations limit competition, and thus make divestitures in this segment somewhat sought after. In a recent regulatory filing, Ogelbay listed its principal competitors as Connecticut-based Unimin, Ohio-based Fairmont Minerals and US Silica, a wholly-owned subsidiary of West Virginia-based Better Minerals & Aggregates.
The sector banker said these competitors could also be among possible acquirers of any sands-related divestitures. In its regulatory filing, Oglebay said it believed that overall, it is the third-largest sands producer and the leader in the southwest US. The banker questioned Oglebay possibly divesting from that segment, but said that its lime-related operations appear to be the segment which they could look to expand. The shareholder said that a divestiture sale would need to include a significant portion if not all cash, to keep creditors happy and pay down debt.
Ohio-based Oglebay has a market capitalization of nearly USD 470m. Last month, it postponed its annual meeting, from May 3 to a date in September, and filed to de-register its shares with the SEC, according to regulatory filings. Oglebay’s stock is traded over-the-counter. It emerged from bankruptcy in January, 2005.
--------------------------------------------------------------------------------------------------------
mergermarket is an M&A intelligence tool focused on providing actionable, origination intelligence to its client base of the world’s principal advisory firms, investment banks, law firms, private equity firms and corporates. mergermarket provides clients with articles such as the one above in real-time via an online platform and personalized email, BlackBerry alerts and an online platform. For more information;
please email ft@mergermarket.com or call EMEA: + 44 (0)20 7059 6105 Americas: +1 212 686-5277 Asia-Pacific: +852 2158 9730
