Ranger Energy Services Acquires American Well Services From Argonaut Private Equity For Total Consideration Of ~$90.5M
Benzinga Newsdesk 11 months ago
M&ANews
Ranger Energy Services, Inc. (NYSE:RNGR) ("Ranger" or the "Company") today announced it has acquired American Well Services ("AWS"), a Permian Basin-focused well services provider, from Argonaut Private Equity
Ranger Energy Services, Inc. (NYSE:RNGR) ("Ranger" or the "Company") today announced it has acquired American Well Services ("AWS"), a Permian Basin-focused well services provider, from Argonaut Private Equity ("Argonaut").
Strategic Highlights
- Expands scale with rig count increasing approximately 25% galvanizing Ranger as the largest well-servicing provider in the lower 48
- Represents a compelling valuation with total consideration of approximately $90.5 million, representing less than 2.5 times trailing EBITDA
- Generates accretion to earnings and cash flow immediately with expected synergies of $4 million identified
- Expects future pro forma EBITDA to exceed $100 million with higher earnings potential as commodity prices recover
- Enables strong pull-through revenue opportunities to Ranger's high specification rig segment with the addition of new complementary service lines
Transaction Consideration
The total consideration payable in the acquisition is approximately $90.5 million, structured as $60 million in cash, 2 million shares of Ranger common stock priced at $12.51 determined in early deal discussions, and a $5 million earn-out contingent on AWS achieving $36 million in EBITDA in the 12 months following closing. The transaction is structured as a cash free, debt free purchase with the cash portion funded with cash on the balance sheet and borrowings on the revolving credit facility. Post-close, leverage is expected to be approximately $50 million, inclusive of Ranger's existing financing leases, putting Ranger's leverage ratio at approximately 0.4x and lower than many peers.
On a pro forma basis, Ranger's go forward EBITDA is expected to exceed $100 million, with earnings potential growing significantly higher under the right macroeconomic conditions. The transaction is expected to be immediately accretive to earnings and free cash flow with expected annual synergies of $4 million to be fully realized before the end of 2026.
This valuation reinforces both Ranger's disciplined approach to acquiring companies and AWS's view of the value creation opportunity created through combining the two companies.
MAXIMIZE CASH FLOW GENERATION
Compelling Valuation: Transaction consideration of approximately $90.5 million represents less than 2.5 times trailing EBITDA with a portion of consideration subject to a $5 million earn-out linked to achieving first-year EBITDA performance of $36 million for the acquired business.
Expanded Financial Prowess: With pro forma annual EBITDA expected to exceed $100 million in 2026 with greater potential in stronger market conditions, Ranger will be able to expand cash flow generation meaningfully.