Cactus, Inc. Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K covers the period ending January 1, 2026. Cactus, Inc. (the "Company") reports the closing of a strategic transaction to acquire a controlling interest in Baker Hughes Pressure Control LLC (the "Joint Venture"), a business focused on surface pressure control applications.
Key Financial Metrics and Transaction Details
- Transaction Type: Acquisition of 65% membership interest in the Joint Venture.
- Purchase Price: $344.5 million in cash (debt-free, cash-free basis, subject to customary adjustments).
- Funding Source: Cash on hand.
- Minimum Cash Retained: Approximately $70 million retained by the Joint Venture.
- Additional Cash Payments to Seller:
- $45.5 million paid on the Closing Date (65% of Minimum Cash Amount).
- $24.5 million to be paid later (35% of Minimum Cash Amount): $10 million on the first anniversary and $14.5 million upon Baker Hughes Company ceasing to be a member.
- Historical Financials: Not provided in this filing; to be filed within 71 days.
- Pro Forma Financials: Not provided in this filing; to be filed within 71 days.
Material Changes and Future Obligations
The primary material change is the formation of a joint venture with Baker Hughes Company, where Cactus, Inc. holds a 65% stake and Baker Hughes holds a 35% stake. Key future financial obligations and terms include:
- Exit Option: Effective from the second anniversary of the Closing Date, either party may trigger a buyout of the other's interest.
- Valuation Methodology: The Exit Price will be based on an enterprise value of 6x Adjusted EBITDA.
- Valuation Caps and Floors:
- Maximum valuation cap: $660 million.
- Minimum valuation floor (if Cactus elects to purchase): $530 million.
- Non-Compete: Restrictions apply to both parties regarding surface pressure control products and services in specified countries.
Guidance, Risks, and Contingencies
The filing does not provide updated revenue guidance or profit outlook for the combined entity. However, it outlines specific governance and operational risks:
- Operational Control: Significant actions (e.g., new debt, capital structure changes, new business lines) require a supermajority vote (75%+) of the Board, including at least one director appointed by Baker Hughes.
- Valuation Contingency: Future cash outflows for a potential full buyout are contingent on the Joint Venture's Adjusted EBITDA performance and the exercise of the Exit Option.
- Regulatory Disclosure: The press release regarding the transaction is furnished but not deemed "filed" for Section 18 liability purposes.
Investor Verification Checklist
- Verify the Adjusted EBITDA definition and calculation methodology in the LLC Agreement (Exhibit 10.1) to assess the potential range of the Exit Price.
- Monitor the upcoming filing (within 71 days) for historical financial statements of the acquired business to evaluate its standalone profitability and cash flow.
- Review the pro forma financial information once filed to understand the immediate impact on Cactus, Inc.'s consolidated balance sheet and leverage ratios.
- Confirm the specific geographic and product scope of the non-compete restrictions to assess potential market limitations.
- Track the $24.5 million deferred payment schedule and the conditions triggering the final $14.5 million installment.