Superior Plus recently agreed to acquire the assets of Freeman Gas and Electric, a retail propane distribution company based in South Carolina, through one of its subsidiaries for an aggregate purchase price of approximately $170 million.
Superior said it anticipates using available cash to fund the amount of the purchase price due on closing. The acquisition, which is subject to customary regulatory and commercial closing conditions, is anticipated to close by June 30.
“We are very pleased to enter into this transaction, which expands our U.S. propane distribution business in the Southeast U.S.,” said Luc Desjardins, Superior’s president and CEO. “Freeman 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 Freeman is our fourth acquisition in 2021 and our first acquisition following the sale of Specialty Chemicals.
“The acquisition of Freeman is representative of the acquisition opportunities we are seeing in the market today, which should enable us to double our U.S. Propane Distribution EBITDA in the next five years.”
Acquisition highlights include:
- Aligned with Superior’s core strategy of investing in established businesses that are in desirable geographies and generate stable free cash flow.
- Builds on Superior’s U.S. propane distribution footprint and scale in North Carolina, South Carolina, Georgia and Tennessee.
- Leverages Superior’s existing expertise, integrated platform and operational effectiveness into a new customer base.
- High-quality, stable cash flow and earnings profile from a business with loyal customers and consistent gross margin profile.
- Expected synergies opportunity of at least 25% of the Adjusted EBITDA of the assets acquired.
- Expected to modestly increase Superior’s 2021 Adjusted EBITDA.
- Pro forma the acquisition, Superior still expects to be within the long-term Total Debt to Adjusted EBITDA target range of 3.0x to 3.5x, the company said.
Founded in 1936 by J.R. Freeman Sr. and H.S. McKeown, Freeman is an established independent family owned and operated retail propane distributor servicing approximately 67,000 residential and commercial customers primarily in North Carolina, South Carolina and Georgia. Freeman has 23 retail branch offices and 38 bulk plants, approximately 7 million gallons of storage capacity, a fleet of 224 vehicles and approximately 275 employees.
On a normalized basis, including the achievement of expected synergies and weather consistent with the five-year average, Superior said it expects Freeman to generate approximately $22 million in Adjusted EBITDA on a run-rate basis 24 months following the close of the acquisition.