Yahoo Finance ChampionX (CHX) to Buy RMSpumptools & Lift Oilfield Technologies
ChampionX Corporation CHX, a key player in oilfield technology, has unveiled plans to acquire RMSpumptools Limited, a strategic move aimed at bolstering its Production and Automation Technologies portfolio.
This $110 million deal underscores CHX's commitment to enhancing its offerings and strengthening its presence in key international markets. The transaction is expected to close by the end of the second quarter or early in the third quarter of 2024, subject to regulatory approvals and JFS shareholder assent.
RMSpumptools, a business unit of UK-based James Fisher and Sons plc (“JFS”), brings to the table more than 40 years of expertise in designing and manufacturing advanced mechanical and electrical solutions for complex artificial lift applications. With a strong foothold in regions like the Middle East and Latin America and global offshore developments, RMSpumptools is poised to generate around $65 million in revenues and $18 million in adjusted EBITDA in 2024.
The acquisition aligns seamlessly with CHX's capital allocation strategy, focusing on strategic technology acquisitions. RMSpumptools’ portfolio, renowned for its wellhead electrical penetrator and mechanical connector systems, complements CHX's existing offerings with minimal overlap, promising expanded growth opportunities, particularly in the Middle East and offshore markets.
Funding for the acquisition will come from CHX's cash reserves, ensuring no disruption to its 2024 return of capital framework, which pledges to return at least 60% of the company's free cash flow to shareholders.
CHX's acquisition of RMSpumptools marks a significant stride in fortifying its position as a global leader in oilfield technology, poised to deliver enhanced value to customers worldwide.
Acquisition, a Major Growth Driver
CHX remains committed to assessing acquisitions aligning with strategic objectives, such as bolstering technology and product offerings, enhancing cost efficiency and extending geographical presence.
On Feb 27, 2024, ChampionX disclosed its acquisition of Artificial Lift Performance, headquartered in Edinburgh, Scotland. The company specializes in advanced analytics solutions tailored to optimize oil and gas production.
Share Price Performance
CHX shares have rallied 13.2% over the past three months, slightly underperforming the Zacks Engineering - R and D Services industry’s 13.9% rise. Despite operating in a challenging environment, the company has showcased resilience, as evidenced by its performance. International revenue growth has been particularly notable, largely attributed to the seasonal upsurge in the Production Chemical Technologies sector.
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The company currently carries a Zacks Rank #3 (Hold) and has a long-term earnings growth rate of 16.2%, which speaks of its inherent strength. The Zacks Consensus Estimate for 2024 earnings per share indicates 8.9% year-over-year growth. The growth prospect is further solidified with a VGM Score of B, backed by a Value Score of B and a Growth Score of A.
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