Superior Plus Announces Closing of Canwest Propane Acquisition Following Receipt of Competition Bureau Clearance

Source Press Release
Company Superior Plus Corp 
Tags Asset Deals, Deals, Refining & Marketing Activities
Date September 27, 2017
  • Expected annual synergies of at least $20 million confirmed
  • Energy Distribution EBITDA from operations increases to $200 million excluding expected synergies
  • Anticipated double digit accretion to 2016 Adjusted Operating Cash flow ("AOCF") per share including expected synergies
  • Favorable resolution reached with the Competition Bureau requiring divestitures of less than 5% of the acquired Canwest retail propane volumes

Superior Plus Corp. (TSX:SPB) ("Superior") today completed its acquisition of Canwest Propane (the "Transaction") after receiving approval from the Competition Bureau.

Energy Distribution highlights

After completion of the Transaction (including required divestitures), Superior's Canadian propane distribution business will be the largest propane distributor in Canada with:

  • annual retail and wholesale propane sales volumes in excess of 1.8 billion litres
  • approximately 200,000 customers from coast to coast
  • 1,700 employees across Canada
  • 262 combined distribution locations to efficiently service retail propane customers

Superior's Energy Distribution pro forma Adjusted EBITDA is approximately $200 million before the anticipated synergies of at least $20 million based on the trailing twelve months ended June 30, 2017.

Synergies and operational benefits

Superior expects to capture at least $20 million in annual synergies from the Transaction after the impact of required divestitures. The integration work, including detailed planning, will commence immediately. Superior anticipates achieving run rate synergies of $15 million by the end of 2018, with the remaining run rate synergies of at least $5 million to be achieved by the end of the second quarter of 2019.

"We are delighted to be able to combine Superior's and Canwest's business, enhance propane's competitive position in the Canada's energy market, achieve regulatory approval and still achieve the initially planned annual synergies from the Transaction of at least $20 million," said Luc Desjardins, Superior's President and Chief Executive Officer.

Regulatory approval details

Earlier today Superior achieved regulatory approval receiving a no-action letter from the Competition Bureau. In a consent agreement registered today, Superior agreed to divest 5 local branches and 9 satellite locations from the combined Superior Propane and Canwest Propane footprint. The estimated impact from the required divestitures is less than 5% of the Canwest retail propane volumes and Adjusted EBITDA based on the trailing twelve months ended June 30, 2017. During the same period, Canwest Propane delivered 447 million litres of retail propane and generated Adjusted EBITDA of approximately $38 million.

Financial Outlook

Superior previously fully funded the acquisition of Canwest with its senior credit facility. Pro forma the completion of the Transaction, Superior's total debt to adjusted EBITDA multiple is 3.5x which is within the previously announced 2017 guidance range for total debt to adjusted EBITDA of 3.2x to 3.6x.

Superior is maintaining its 2017 AOCF per share guidance of $1.50 to $1.75, which does not include any of the anticipated synergies from the Transaction since most of these are not anticipated to occur until after the winter heating season. Superior will provide its 2018 financial outlook as part of the release of its third quarter financial results scheduled for November 8, 2017.

Benefits to customers

The Transaction provides significant benefits to customers in that it enhances Superior's ability to provide its industry leading digital strategy and solutions to additional customers, improves logistics and fleet usage resulting in consistent, reliable delivery of products and allows Superior to operate more efficiently to reduce costs at all levels.

"I am excited to officially welcome Canwest, its people and its partners to the Superior Propane family. The combination of these two Canadian propane companies creates a strong platform and reflects the hard work and contributions of many employees from both organizations," said Greg McCamus, President of Superior Propane and Superior's Energy Distribution business. "We are excited to get started on the integration, achieving the synergies and implementing the Superior Way service offering to Canwest's customers. We look forward to implementing our industry leading digital strategy to further enhance the great customer service previously provided by Canwest ."

Evolution 2020

With the closing of the Canwest acquisition and our 4 previously announced tuck-in acquisitions in Canada and the U.S., Superior has made significant progress towards achieving the Evolution 2020 goal of increasing EBITDA from operations by $50 to $150 million. Superior continues to look for additional accretive acquisitions to grow both our Energy Distribution and Specialty Chemicals businesses, with a focus on improving the underlying operations through organic growth, efficiency and differentiation for our value-added services.

Source: EvaluateEnergy® ©2018 EvaluateEnergy Ltd