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Macquarie Infrastructure Company LLC (MIC - Snapshot Report) announced the pricing of an underwritten public offering of 10 million shares and also of $305 million worth of five-year convertible senior notes. The infrastructure service provider will use the proceeds to fund the purchase of the remaining stake in New Orleans-based International-Matex Tank Terminals.

Equity & Debt Issues

The company priced an underwritten public offering of 10 million shares at $66.50 per share. It also granted the underwriters a 30-day option to purchase up to an additional 1.5 million shares. The offering, subject to customary closing conditions, is expected to close on Jul 15, 2014.

The $305 million worth of convertible senior notes were priced at a conversion premium of 27.5% over the public offering price of $66.50 each share. Due Jul 2019, the convertible senior notes will yield 2.875%, and will be converted into shares of Macquarie. Initially valued at $250 million, the offering size was increased to $305 million.

Additionally, the underwriters have been granted a 30-day option to buy up to an additional $45 million of convertible senior notes. Barclays PLC (BCS - Analyst Report), JPMorgan Chase & Co. (JPM - Analyst Report), Macquarie Capital, RBC Capital, the investment banking arm of Regal Beloit Corporation (RBC - Analyst Report), SunTrust Robinson Humphrey and Wells Fargo Securities are acting as joint book-running managers of the offerings.

The Acquisition

Macquarie has decided to acquire the remaining 50% stake, and consequently full ownership, in International-Matex Tank Terminals for $910 million in cash and $115 million in newly-issued stock. It already owns 50% stake in the company since May 2006.

The cash part of the deal will be funded using proceeds from the debt and share issuance, as well as cash on hand. Any leftover proceeds from the offerings will be utilized for general corporate purposes. The acquisition is expected to conclude later this month, subject to mandatory closing conditions and regulatory approvals.

Synergies

The acquisition of International-Matex, operator of 12 bulk liquid storage terminal facilities in North America, is part of Macquarie’s strategy to ensure steady revenue streams in order to counteract the cyclical nature of their equity trading and advisory operations. The buyout is also expected to strengthen the company’s foray into the stable commodities business.

With full ownership, Macquarie will be better positioned to capitalize on the acquiree’s robust growth momentum, further enhancing its footprint in North America. Moreover, management expects the deal to drive operational improvement and dividend growth.

Moving Forward

The deal is the latest in a series of terminals business acquisitions for Macquarie. The group acquired 45% stake in Singapore’s Helios Terminal Corp. from Oiltanking GmbH last year. It also bought ANZ Terminals, which provides liquids storage facilities, for $492 million, according to a Jun 30 report by the Australian Financial Review.

Macquarie presently holds a Zacks Rank #3 (Hold).

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