425: WES, Aris Water Announce Preliminary Merger Election Results

Western Midstream Partners and Aris Water Solutions jointly announced preliminary results for the election of merger consideration by Aris securityholders.

Summary

• Western Midstream Partners (WES) is acquiring Aris Water Solutions, Inc. (Aris) as per the Merger Agreement dated August 6, 2025.
• 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 and 0.450 WES Common Units), or Cash Election Consideration ($25.00 cash).
• The Cash Election Consideration is subject to proration to ensure the total cash consideration does not exceed $415.0 million.
• Preliminary results show 9,589,105 Aris Class A shares and 4,289,350 Aris OpCo Stapled Units elected Common Unit Consideration.
• 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.
• As a result of the maximum cash consideration being met, Aris securityholders who elected 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.

Sentiment

Score: 7

Explanation: The announcement confirms the merger is progressing as planned, with the election process largely complete. While cash election proration might disappoint some shareholders, it was an anticipated outcome within the merger terms. The overall sentiment is positive for the transaction's advancement.

Positives

• The merger consideration election process is largely complete, indicating the transaction is progressing towards closing.
• The total cash consideration of $415.0 million was fully subscribed, demonstrating strong demand for the cash option among Aris securityholders.

Negatives

• Aris securityholders who elected the Cash Election Consideration will receive a prorated amount of cash and WES Common Units, meaning they will not receive the full $25.00 per share in cash they elected.

Risks

• The expected timing and likelihood of completion of the Transaction, including the ability to successfully integrate the businesses, may not materialize as anticipated.
• An event, change, or other circumstance could arise that leads to the termination of the Merger Agreement.
• Aris stockholders may not approve the Merger Agreement at their special meeting.
• The parties may be unable to satisfy the conditions to the Transaction in a timely manner or at all.
• The Transaction could disrupt management time from ongoing business operations.
• Announcements related to the Transaction could adversely affect the market price of WES Common Units or Aris Class A Common Stock.
• The Transaction and its announcement could negatively impact the ability of WES and Aris to retain customers, hire key personnel, and maintain relationships with suppliers and customers, affecting operating results and businesses generally.
• The pending Transaction could distract management of both entities and lead to substantial costs.
• Problems may arise in successfully integrating the businesses, potentially resulting in the combined company not operating as effectively and efficiently as expected.
• The combined company may be unable to achieve anticipated synergies or may take longer than expected to achieve them.

Future Outlook

The transaction is progressing towards completion, with final election results anticipated shortly before closing. The combined company expects to achieve successful integration and synergies, although various risks associated with mergers and operations are acknowledged.

Industry Context

This merger combines Western Midstream Partners, a significant midstream energy operator, with Aris Water Solutions, an environmental infrastructure and water solutions provider focused on the Permian Basin. This strategic move reflects a broader industry trend towards integrating essential services like water management within energy operations, particularly in high-production areas, to enhance sustainability, reduce operational costs, and improve environmental footprints.

Stakeholder Impact

• Shareholders of Aris Water Solutions will receive a combination of WES Common Units and cash, with those electing the full cash option experiencing proration and receiving a portion in WES units.
• Shareholders of Western Midstream Partners will experience dilution due to the issuance of approximately 26.6 million new WES Common Units as part of the merger consideration.
• Customers of both companies may benefit from a more integrated service offering in midstream and water solutions, particularly in the Permian Basin.
• Employees of both companies may face integration challenges and potential organizational changes as the two entities combine.

Next Steps

• Complete guaranteed delivery procedures for the election results.
• Determine final certified election results, expected shortly before closing.
• Calculate the final Merger Consideration and its allocation in accordance with the Merger Agreement.
• Hold a special meeting for Aris securityholders on October 14, 2025, to consider the Transaction.

Key Dates

Recommendation

The filing provides a procedural update on the merger consideration election, confirming the transaction is moving forward as expected. While the proration of cash consideration might cause some short-term volatility for Aris shareholders who preferred cash, the overall strategic rationale for the merger remains unchanged. For investors holding either WES or Aris, maintaining their position to see the merger through to completion and assess the integrated entity's performance is a reasonable approach, given the information is largely procedural and within anticipated parameters.

Keywords

Western Midstream Partners, Aris Water Solutions, WES, ARIS, Merger, Acquisition, Merger Consideration, Stock Election, Cash Election, Proration, Midstream, Water Solutions, Permian Basin