Superior Plus, through a wholly owned subsidiary, recently acquired the assets of Rymes Propane and Oil, a retail propane and heating oil distribution company based in New Hampshire, for approximately $159 million.
Superior, headquartered in Toronto, Canada, said it used cash from its credit facility to pay the amount of the purchase price due on closing. The acquisition includes all of Rymes’ operations, except its business and related assets on the island of Martha’s Vineyard MA.
“I am excited to welcome the Rymes employees and customers to the Superior Plus Propane family,” said Andy Peyton, president of Superior’s U.S. propane distribution business. “We’re looking forward to expanding our footprint in the New Hampshire and New England propane markets and growing our business in these attractive markets in the Northeast U.S.”
Highlights of the acquisition, according to Superior, include:
- Alignment with Superior’s core strategy of investing in established businesses that are in desirable geographies and generate stable free cash flow.
- Expansion of Superior’s U.S. propane distribution footprint and scale in New Hampshire and New England.
- Leverage of Superior’s existing expertise, integrated platform and operational effectiveness with a new customer base.
- High-quality, stable cash flow and earnings profile from a business with loyal customers and consistent gross margin profile.
- Estimated synergies opportunity exceeds synergies achieved with previous acquisitions completed in the past 24 months based on the percentage of the Adjusted EBITDA of the assets acquired.
- Expectation of increasing Superior’s 2020 Adjusted EBITDA.
- Pro forma the acquisition, Superior expects to be within its targeted Total Debt to Adjusted EBITDA guidance range of 3.0x to 3.5x.
Founded in 1969 by James T. Rymes, Sr. and Carol Rymes, Rymes is an established independent, family-owned and -operated retail propane and heating oil distributor servicing approximately 88,000 residential and commercial customers primarily in New Hampshire, Maine, Massachusetts and Vermont. Rymes has 46 operating locations, approximately 3 million gallons of storage capacity, a fleet of 350 vehicles and approximately 370 employees.
New Hampshire is an attractive propane distribution market for Superior to expand its footprint, the company said. Based on management estimates and independent third-party research, the New Hampshire retail propane distribution market has approximately 185 million gallons of demand and an opportunity for further industry consolidation as the market is highly fragmented, with more than 50 independent propane retailers operating in the state.
During the year ended Dec. 31, 2019, Rymes earned approximately $20 million (CDN $26 million) in Adjusted EBITDA. On a normalized basis, including the achievement of expected synergies and weather consistent with the five-year average, Superior expects Rymes to generate approximately $27 million (CDN $36 million) in Adjusted EBITDA on a run-rate basis 18 months following the close of the acquisition.
“We are very pleased to enter into this transaction which expands our U.S. propane distribution business in the Northeast U.S.,” said Luc Desjardins, Superior’s president and CEO. “Rymes is a solid business and we look forward to welcoming the team to Superior and continuing to provide outstanding customer service to their customers.
“The acquisition of Rymes is our third acquisition in 2020 and increases the total value of acquisitions in 2020 to approximately $270 million.”
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