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  • Enerflex Ltd. (EFX) and Exterran Corporation to combine, creating a premier integrated global provider of energy infrastructure
  • The companies will combine in an all-share transaction
  • The transaction value for Exterran is approximately US$735 million, which represents an 18 per cent premium to Exterran’s enterprise value
  • The transaction is expected to close in the second or third quarter of 2022
  • The Boards of Directors of Enerflex and Exterran have each unanimously approved the Transaction
  • Enerflex Ltd. (EFX) is down 14.81 per cent, trading at C$6.73 at 1:16 pm EST

Enerflex (EFX) and Exterran Corporation have announced a business combination to create a premier provider of energy infrastructure.

Enerflex will operate as Enerflex Ltd. and will remain headquartered in Calgary, Alberta, Canada.

Through increased scale and efficiencies, the transaction will strengthen Enerflex’s ability to serve customers in key natural gas, water, and energy transition markets, while enhancing shareholder value through sustainable improvements in profitability and cash flow generation.

The companies will combine in an all-share transaction pursuant to which Enerflex will acquire all of the outstanding common stock of Exterran on the basis of 1.021 Enerflex common shares for each outstanding share of common stock of Exterran.

This results in approximately 124 million Enerflex common shares outstanding upon closing, representing an implied combined enterprise value of approximately US$1.5 billion.

The transaction value for Exterran is approximately US$735 million, which represents an 18 per cent premium to Exterran’s enterprise value as of January 21, 2022.

The transaction value paid for Exterran implies an EV/2022E Adjusted EBITDA of 3.6x and Price/2022E Cash Flow of 1.9x, including synergies, respectively.

Upon closing of the transaction, Enerflex and Exterran shareholders will respectively own approximately 72.5 per cent and 27.5 per cent of the total Enerflex common shares outstanding.

Enerflex will continue to trade on the TSX and intends to apply to either the New York Stock Exchange or the NASDAQ exchange for the listing of Enerflex common shares to be effective upon Transaction close.

“This is an exciting day in the history of our companies. The Transaction is immediately accretive to shareholders; enhances our presence, offerings, and scale across our regions; and importantly, executes upon our years-long strategic goal of increasing recurring revenues to improve the profitability and resiliency of our platform,” said Marc Rossiter, Enerflex’s President and Chief Executive Officer.

“Together, we are more efficient and better positioned in global capital markets. The Transaction will improve our ability to partner with an expanded set of customers to solve their growing energy infrastructure challenges with integrity, creativity, commitment, and success,” added Rossiter.

“The scale and efficiencies this combination brings is the right path for Exterran and brings significant opportunities for accelerated growth in produced water treatment and energy transition products and services,” added Andrew Way, President and Chief Executive Officer of Exterran.

The transaction is expected to close in the second or third quarter of 2022, subject to, among other things: the approval of the transaction by Exterran stockholders.

The approval by Enerflex shareholders of the issuance of Enerflex common shares pursuant to TSX requirements in connection with the transaction; regulatory approvals; and other customary closing conditions, including those of the TSX and the NYSE or NASDAQ, as applicable.

The Boards of Directors of Enerflex and Exterran have each unanimously approved the Transaction and recommend that their respective shareholders vote in favour of the Transaction.

“The world’s continued reliance on natural gas is evidenced by strong fourth-quarter 2021 Engineered Systems bookings of over CAD$300 million, our highest bookings quarter since 2018,” concluded Rossiter.

Enerflex Ltd. (EFX) is down 14.81 per cent, trading at C$6.73 at 1:16 pm EST.

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