In a significant strategic move, USA Compression Partners, LP (USAC) has announced the acquisition of J-W Power Company, a privately held entity, for a total consideration of $860 million. This transaction is structured with an equal split of new USAC units and cash, highlighting a balanced approach to financing a key expansion.
This acquisition is poised to deliver immediate financial benefits to USAC. Projections indicate that the company's 2026 EBITDA multiple will decrease from 8.9x on a standalone basis to a more favorable 8.4x post-acquisition. A crucial aspect underpinning the deal's attractiveness is J-W Power Company's robust financial outlook, with 90% of its projected 2025 EBITDA already secured through long-term contracts. This provides strong revenue visibility and minimal needs for additional capital expenditures to support incremental horsepower, facilitating USAC's deleveraging strategy towards a net debt/EBITDA ratio below 4x, driven by the escalating demand for natural gas compression services across the U.S.
This strategic expansion by USA Compression Partners underscores a commitment to strengthening its market position and enhancing shareholder value through judicious acquisitions. By integrating J-W Power Company's stable revenue streams and operational efficiencies, USAC is well-positioned to capitalize on the sustained growth in domestic natural gas production and the associated demand for essential infrastructure services.