Argo Infrastructure Partners to Acquire MIC Hawaii
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Macquarie Infrastructure Corporation (MIC) signed a merger agreement with an affiliate of Argo Infrastructure Partners. At closing the company’s MIC Hawaii businesses will become a wholly-owned subsidiary of Argo for expected consideration of $3.83 per unit. The transaction is expected to close in the first half of 2022.
MIC Hawaii comprises primarily a combined regulated gas utility and unregulated distributor of propane, and several smaller businesses collectively engaged in efforts to reduce the cost and improve the reliability and sustainability of energy in Hawaii.
In October 2019, MIC released its pursuit of strategic alternatives including a sale of the whole of the company or its individual operating businesses. MIC launched the sales processes early in 2020.
In December 2020, MIC completed a sale of its bulk liquid storage terminal business, IMTT, for $2.67 billion. The proceeds were used to eliminate holding company level debt with the remainder distributed to shareholders as a special dividend of $11.00 per share in cash in January 2021.
In June 2021, MIC agreed to sell its aviation services business, Atlantic Aviation, for $4.475 billion. The transaction is expected to close in the fourth quarter of 2021, following completion of the company’s planned reorganization, and result in a cash distribution of approximately $37.35 per unit.
“Since 2018, our strategy has centered on enhancing the infrastructure characteristics of our businesses, improving their resilience and unlocking additional value for our shareholders,” said Christopher Frost, chief executive officer of MIC.
“While COVID-19 lengthened the time frame to complete these efforts, we are now transferring our businesses to private owners who recognize their improved resilience and growth potential. Subject to the successful closing of our two agreed transactions, we have delivered on our commitments and will return net proceeds to shareholders of $52.18 per share, representing a 35 percent premium to our share price prior to embarking on our pursuit of strategic alternatives,” added Frost.
Merger Agreement
Under the terms of the merger agreement, at closing, Argo will pay the merger consideration to unitholders, and fund transaction costs and fund a disposition payment to MIC’s external manager of approximately $82 million if the merger closes on or before July 1, 2022 or $57 million if the merger closes after this date.
The terms of the merger agreement correspond to an enterprise value for MIC Hawaii of $514 million including assumed debt and transaction costs resulting in a multiple of 2021 earnings before interest taxes and depreciation (EBITDA) of 12.9 times at the midpoint of company guidance.
The merger is expected to be completed in the first half of 2022 subject to customary approvals, including by the Hawaii Public Utilities Commission and by MIC shareholders.
About MIC
MIC owns and operates businesses providing basic services to customers in the United States. Its businesses consist of an airport services business, Atlantic Aviation, and entities comprising an energy services, production and distribution segment, MIC Hawaii.
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