Summit Midstream Corporation (NYSE: SMC), through its subsidiary Summit Midstream Partners, LP, has completed the acquisition of Tall Oak Midstream Operating, LLC and its subsidiaries. The transaction includes a $155 million cash payment, the issuance of 7.5 million partnership common units as well as 7.5 million SMC Class B shares, and a $25 million contingent consideration. dollars in cash, spread over measurement periods until March 31, 2026.
This acquisition, approved by an overwhelming majority of shareholders at a special meeting held virtually on November 29, 2024, is part of a growth strategy for Summit. With this transaction, the company repositions its portfolio, reaching a distribution of approximately 50% of activities focused on natural gas. This diversification should promote the financial and strategic resilience of the company, while maintaining an overall debt ratio of approximately 3.8x as of September 30, 2024.
Massive shareholder support
The special meeting mobilized 76.7% of the shares eligible for voting, with an approval rate of 99.8% for the issuance of shares intended to finance the acquisition. This broad support illustrates the confidence of investors in the prospects offered by this transaction.
Strategic and financial benefits
The addition of Tall Oak Midstream to Summit's portfolio expands natural gas gathering and processing operations. This operation is deemed to create value, thanks to an increase in volumes and a favorable leverage effect. Tall Oak, previously owned by a subsidiary of Tailwater Capital LLC, also brings operational synergies and improved capacity to serve customers in production basins.
Perspectives futures
Through this acquisition, Summit is positioned to capitalize on growing opportunities in the gas sector, while solidifying its position as a key player in energy infrastructure in the United States. Next steps will include integrating Tall Oak's assets and leveraging new growth levers.
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