425: WES & Aris Announce Merger Consideration Election Results

Western Midstream and Aris Water Solutions jointly announced preliminary results for the election of merger consideration by Aris securityholders, leading to cash proration for some.

Summary

• Western Midstream Partners, LP (WES) is acquiring Aris Water Solutions, Inc. (Aris) in a pending transaction.
• Aris securityholders had the option to elect one of three forms of merger consideration: Common Unit Election Consideration (0.625 WES Common Units), Mixed Election Consideration ($7.00 cash + 0.450 WES Common Units), or Cash Election Consideration ($25.00 cash).
• The Cash Election Consideration was subject to proration to ensure total cash consideration would not exceed $415.0 million.
• Preliminary results as of the October 7, 2025, election deadline show: 9,589,105 Aris Class A shares and 4,289,350 Aris OpCo Stapled Units elected Common Unit Consideration (including deemed elections).
• 1,901,249 Aris Class A shares and 9,304,608 Aris OpCo Stapled Units elected Mixed Election Consideration.
• 21,247,291 Aris Class A shares and 12,873,151 Aris OpCo Stapled Units elected Cash Election Consideration.
• It is estimated that approximately 26.6 million WES Common Units will be issued and $415.0 million in cash will be paid to Aris securityholders, reaching the maximum total cash consideration.
• Consequently, Aris securityholders who elected the Cash Election Consideration will receive a prorated amount of cash and WES Common Units.
• These results are preliminary and subject to completion of guaranteed delivery procedures; final certified results are expected shortly before closing.
• No fractional WES Common Units will be issued; holders will receive cash in lieu of any fractional units.

Sentiment

Score: 7

Explanation: The filing indicates the merger process is proceeding as planned, with preliminary election results announced. While cash proration might be a minor negative for some shareholders, the overall progression towards closing is positive for the transaction's certainty.

Positives

• The merger process is progressing as planned with the announcement of preliminary consideration election results.
• The preliminary results provide clarity on the expected mix of cash and units to be issued in the transaction.
• The transaction is moving closer to completion, reducing uncertainty for both companies and their investors.

Negatives

• Aris securityholders who elected the Cash Election Consideration will not receive full cash and will instead receive a prorated amount of cash and WES Common Units.

Risks

• The expected timing and likelihood of completion of the Transaction, including the ability to successfully integrate the businesses.
• The occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement.
• The possibility that stockholders of Aris may not approve the Merger Agreement.
• The risk that the parties may not be able to satisfy the conditions to the Transaction in a timely manner or at all.
• Risks related to disruption of management time from ongoing business operations due to the Transaction.
• The risk that any announcements relating to the Transaction could have adverse effects on the market price of WES Common Units or Aris Class A Common Stock.
• The risk that the Transaction and its announcement could have an adverse effect on the ability of WES and Aris to retain customers and retain and hire key personnel and maintain relationships with their suppliers and customers and on their operating results and businesses generally.
• The risk the pending Transaction could distract management of both entities and they will incur substantial costs.
• The risk that problems may arise in successfully integrating the businesses of the companies, which may result in the combined company not operating as effectively and efficiently as expected.
• The risk that the combined company may be unable to achieve synergies or it may take longer than expected to achieve those synergies.

Future Outlook

The transaction is progressing towards completion, with final certified election results expected shortly before closing. The combined company anticipates successful integration and the realization of synergies, though various risks associated with the merger process and integration are acknowledged.

Industry Context

Western Midstream is a master limited partnership operating midstream assets across Texas, New Mexico, Colorado, Utah, and Wyoming, focusing on natural gas, liquids, crude oil, and produced water services, with a substantial portion of cash flows protected by fee-based contracts. Aris Water Solutions is a growth-oriented environmental infrastructure company providing full-cycle water handling and recycling solutions, primarily for produced water management in the Permian Basin, aiming to enhance sustainability for energy companies. This merger combines complementary services within the energy infrastructure sector, particularly in the critical area of water management for oil and gas operations.

Stakeholder Impact

• Shareholders of Aris Water Solutions will receive merger consideration (cash, WES common units, or a combination) based on their elections, with cash elections subject to proration.
• Shareholders of Western Midstream Partners will experience dilution due to the issuance of new WES Common Units as part of the merger consideration.
• Customers of both companies may benefit from the combined entity's integrated services and expanded capabilities in midstream and water solutions.

Next Steps

• Completion of guaranteed delivery procedures for election results.
• Final certification of election results, expected shortly before closing.
• Calculation of the final Merger Consideration and its allocation.
• Aris securityholders' special meeting on October 14, 2025, to consider the Transaction.
• Closing of the Transaction.

Key Dates

Recommendation

The filing provides an update on the preliminary merger consideration elections, confirming the transaction is progressing as expected towards completion. While the proration of cash consideration for some Aris shareholders is noted, it was a disclosed possibility. For existing shareholders of Aris, holding until the merger closes to receive the consideration is the logical step. For potential investors, the current stage offers limited new information to significantly alter investment theses, suggesting a 'hold' until the final terms and combined entity's outlook are fully realized post-merger.

Keywords

Western Midstream, Aris Water Solutions, Merger, Acquisition, Merger Consideration, Election Results, Proration, WES, ARIS, Midstream, Water Solutions, Permian Basin, SEC Filing