Cactus, Inc. signed a merging definitive agreement with holding company HighRidge Resources, Inc. and Atlas Merger Sub, LLC, to acquire FlexSteel Technologies Holdings, Inc., according to a press release.
“This acquisition enhances Cactus’ position as a premier manufacturer of specialized technologies delivered directly to our industry’s end-users,” Scott Bender, president and CEO of Cactus, said. “FlexSteel’s products combine the durability and reliability of steel with the speed and efficiency of spoolables.”
Placed on cash-free, debt-free basis terms, the deal, worth an upfront sum of approximately $621 million, is subject to customary purchase price adjustments. It is expected to close early this year, but will still be up for regulatory approvals and other customary conditions. A potential earn-out payment of up to $75 million is expected to be paid by mid 2024 if FlexSteel reaches several financial target goals.
FlexSteel’s current president and CEO, Thirucherai Sathyanarayanan, will be tasked with leading the operations.
FlexSteel specializes in spoolable pipe technologies purchased by customers during the production phases of a well’s lifecycle.
“FlexSteel also provides meaningful growth potential driven by: The industry’s shift away from legacy offerings in favor of more technologically advanced solutions; customers’ trend toward larger diameter products and penetration into new markets such as midstream, international, shallow-water and carbon capture,” Bender said. “Over time, we expect to realize the benefits of cost efficiencies by implementing our existing supply chain expertise and utilizing the combined company’s infrastructure to deliver specialized products to an expanded customer base.”
The features that attracted FlexSteel to Cactus were its technological innovation, its state-of-the-art manufacturing abilities, its capital requirements and its overall general growth.
“Both businesses have succeeded by making highly technical sales to market-leading customers,” Bender said. “FlexSteel’s products are also highly complementary to Cactus’ equipment at the wellsite. As such, we believe this company meets the exacting criteria we have described over the last several years.”