ArcLight in $44m deal for midstream outfit

ArcLight Capital Partners paid $44m for Blackwater Midstream, offering a 29% premium to take the company private. The deal made ArcLight the latest infrastructure investor to purchase a midstream service.

ArcLight Capital Partners snatched up publicly traded Blackwater Midstream Corporation, a New Orleans company specialising in petroleum storage, for $44.1 million or $0.64 per share, according to a press announcement.

ArcLight will take Blackwater private, Blackwater said. The $0.64 offer is a 29.4 percent premium over the previous 30-day average $0.49 closing price. Nano-cap Blackwater is traded over the counter under the ticker symbol BWMS.

The ArcLight deal for Blackwater marked the second midstream transaction involving a major infrastructure investor in June – Global Infrastructure Partners (GIP) paid $4 billion for Chesapeake Midstream Partners, a master-limited partnership (MLP) that GIP cofounded with Chesapeake Energy Corporation.

A midstream company is involved in storing, processing, transporting and marketing oil, natural gas and bulk liquid. Within the industry, midstream service is considered a crucial energy infrastructure asset.

Blackwater is a storage terminal operator focused on third party petroleum, chemical and agricultural bulk liquid, and is active in Louisiana, Maryland and Georgia. The company opened in 2004.

In November 2010, Blackwater received an unsolicited takeover bid offering $0.50 a share. Blackwater shot down the deal, claiming the would-be deal undervalued the company.

ArcLight, on the other hand, proposed a better offer, according to Blackwater chief executive Michael Suder, who cited the deal for its “excellent” shareholder value.

Suder went on to note “our full management team is committed to remaining with the company.”

With $10 billion in capital, ArcLight is a private equity buyout outfit focused on the energy sector, with a marked interest in power generation, midstream service and transmission and distribution.