During Thursday’s extended trading session, shares of Martin Midstream Partners L.P. (NASDAQ: MMLP) saw a notable increase subsequent to the announcement of a strategic merger agreement. The shares of MMLP surged to $3.95, indicating a strong 9.72% advance following the market.
Martin Midstream Signed a Final Merger Contract
A formal agreement has been reached between Martin Midstream (MMLP) and Martin Resource Management Corporation (MRMC) about a merger. MRMC and its subsidiaries intend to purchase all of Martin Midstream’s outstanding common units that they do not currently possess. This development follows MRMC’s initial proposal made in May 2024, wherein it expressed interest in acquiring the Public Common Units.
Financial Implications and Premiums for MMLP Unit Holders
The Merger Agreement stipulates an all-cash transaction, wherein each holder of MMLP Public Common Units will receive $4.02 per unit owned. This represents a noteworthy 34.00% premium compared to the market closing price before MRMC’s initial proposal on May 24, 2024, and an 11.33% premium relative to the trailing 30-day volume-weighted average price.
Board Oversight and Expected Closing Timeline
The Conflicts Committee was given power by the Board of Directors of MMLP’s general partner, Martin Midstream GP LLC, to guarantee a comprehensive review of the deal. This committee, which consisted only of three independent directors, was in charge of MMLP and its unitholders—aside from some associated parties—in the negotiation and approval of the deal.
The Conflicts Committee recommended the deal to the GP Board, which also authorized it, after carefully reviewing it with independent legal and financial experts. With usual closing conditions met, including as governmental clearances and approval from the majority of outstanding common unit holders, the deal is expected to close by the end of 2024.
Notably, MRMC and its affiliates, including Ruben S. Martin III and Senterfitt Holdings Inc., have committed to vote their collective 26% stake in favor of the transaction. MRMC plans to finance the total merger consideration and associated transaction costs through existing cash reserves, future cash flow, credit facility borrowings, and a $5 million loan from certain management team members.
