US Kirby adds to offshore business, buys K-Sea for $600m

14 March 2011 18:43  [Source: ICIS news]

HOUSTON (ICIS)--US inland barge firm Kirby gave a boost to its offshore business with the $600m (€432m) acquisition of K-Sea Transportation Partners, Kirby said on Monday.

The purchase of New Jersey-based K-Sea complements the Texas firm’s existing inland tank barge business, said Kirby CEO Joe Pyne.

“If you get it to water, we can move it,” Pyne said in a conference call on the deal, which calls for Kirby to pay K-Sea $335m for its equity and refinance $265m in debt.

One of the largest US inland barge operators, Kirby hauls petrochemicals and oil products on the Gulf Intracoastal Waterway and the Mississippi river, with a fleet of 897 tank barges and 221 towboats, according to the company.

K-Sea’s fleet operates 58 tank barges and 63 tugboats on both US coasts and tows barges to offshore locations. It has facilities in New York; Philadelphia, Pennsylvania; Norfolk, Virginia; Seattle, Washington; and Honolulu, Hawaii.

Pyne estimated the earnings impact on Kirby to be $.05/share in one-time transaction costs. Kirby stands by its earnings guidance for 2011 of $2.55-$2.80/share, he said.

Houston-based Kirby has been in an acquisition mode this year, buying a ship bunkering firm, Enterprise Marine Services, for $53m in cash in February.

Kirby also has a deal pending to buy United Holdings, an engine and transmission distributor, for around $320m, according to the company.

The Texas firm’s stock zoomed up initially on Monday by almost $4/share, hitting a new 52-week high of $60/share, an 8% gain over Friday’s close of $55.33. But the stock fell back to around $55.60/share in midday trading.

K-Sea’s stock jumped much higher in percentage terms, climbing to $8.08/share in mid-day trading, up 25% compared with a Friday close of $6.47/share.

Kirby plans to pay K-Sea shareholders $8.15/share, either in cash or a combination of cash and Kirby stock, according to the acquisition announcement..

Two US law firms said on Monday they were investigating the deal for K-Sea shareholders.

Kendall Law Group in Dallas, Texas, said in a statement that it was investigating the terms to see if Kirby had entered into the acquisition “without properly shopping for a deal that would provide better value for unitholders.”

And another US law firm, Bertstein Liebhard, made a similar statement, saying it was investigating because of the “potential unfairness of the price to K-Sea shareholders and the process by which the K-Sea Board of Directors considered and approved the transaction.”

($1 = €0.72)

By: Lane Kelley
+1 713 525 2653

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