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Highlights
- ARC to acquire all remaining STEP shares for AUD 5.50 per share in cash.
- Minority shareholders holding 71.71% of minority shares have agreed to vote in favour.
- The transaction is expected to close in December 2025, subject to approvals.
STEP Energy Services Ltd. (TSX:STEP) has entered into a definitive arrangement agreement with ARC Financial Corp. and its associated entities to take the company private in an all-cash transaction. This follows the non-binding proposal announced on 25 September 2025.
Under the terms of the agreement, ARC will acquire all issued and outstanding common shares of STEP that it does not already own for cash consideration of AUD 5.50 per share. The transaction will be completed through a plan of arrangement under the Business Corporations Act (Alberta).
The board of directors of STEP has unanimously approved the arrangement and recommends that minority shareholders vote in favour of the resolution. Completion of the transaction remains subject to shareholder and court approval, as well as other customary closing conditions. The arrangement is expected to close in December 2025.
Premium and Shareholder Support
The purchase price represents a 29% premium to STEP’s closing share price on 24 September 2025, the last trading day before the announcement of ARC’s initial non-binding offer.
ARC has secured voting support agreements with minority shareholders holding approximately 32.11% of total shares and 71.71% of minority shares. These shareholders have agreed, subject to terms, to vote in favour of the arrangement at the upcoming special meeting.
Independent Valuation and Board Approval
Ernst & Young LLP (EY) was engaged as an independent valuator to assess the fair market value of STEP’s shares. According to EY’s report dated 14 October 2025, the fair value range for the shares was estimated between AUD 4.80 and AUD 5.70 per share. The agreed purchase price of AUD 5.50 falls within this range.
The independent directors of the board formed a special committee to evaluate ARC’s proposal and consider other strategic alternatives. After reviewing EY’s formal valuation and fairness opinion, the committee unanimously recommended the transaction.
Following this review, the STEP board, with representatives of ARC abstaining, determined that the arrangement is fair to minority shareholders and in the company’s best interests.
Lock-Up Agreements and Next Steps
ARC has entered into voting support agreements with several institutional investors, including MMCAP International, XIB Asset Management funds, and Groundlayer Capital. These investors, along with STEP’s officers and directors, collectively represent approximately 1.61% of outstanding shares. Including holdings of ARC Energy Fund 6 and Fund 8, this group collectively controls around 87.33% of total shares.
A special shareholder meeting is scheduled for 12 December 2025, where shareholders will vote on the proposed arrangement. Following shareholder and court approvals, closing is anticipated on or about 16 December 2025.
Upon completion, STEP shares are expected to be delisted from the Toronto Stock Exchange, and the company will apply to cease being a reporting issuer.
