(Dow Jones) Kirby Corp. (KEX) has agreed to buy tank barges and tugboats operator Penn Maritime Inc. and an affiliated company in a cash and stock deal of about $180 million as it looks to expand its footprint in the asphalt transportation market.
“Penn’s fleet will extend our coastal product capabilities, particularly transporting asphalt, which we expect to benefit from the need to repair and upgrade aging highway infrastructure throughout the U.S.,” Kirby Chief Executive Joe Pyne said. “Penn also has vessels operating in the Gulf Coast crude oil trade which is benefiting from the production and transport of shale-based crude, particularly out of the Eagle Ford shale formation.”
Kirby will pay $180 million–made up of about $152 million in cash and 500,000 shares of Kirby’s stock–for Penn Maritime and Maritime Investments LLC. It will pay about $115 million for the retirement of Penn’s debt, bringing the total transaction value to $295 million.
The deal is expected to close in mid-to-late December and will be financed through a combination of borrowing under Kirby’s revolving credit facility, issuance of new unsecured fixed rate senior notes, and the issuance of Kirby common stock.
Penn operates a fleet of 18 heated, double-hulled tank barges, with a capacity of 1.9 million barrels, and 16 tugboats along the East Coast and Gulf Coast of the U.S. Its tank barge fleet has an average age of about 13 years with a product mix that consists primarily of refinery feedstocks, asphalt and crude oil. Customers include major oil companies and refiners, nearly all of whom are current Kirby customers for inland tank barge services. The operator of tank barges and tugboats participates in the coastal transportation of primarily black oil products in the U.S.
Meanwhile Kirby, based in Houston, Texas, is the nation’s largest domestic tank barge operator, transporting bulk liquid products throughout the Mississippi River System, the Gulf Intracoastal Waterway, coastwise along all three U.S. coasts and in Alaska and Hawaii.
Kirby said it expects to take a one-time per-share impact from the acquisition in the fourth quarter due to transaction fees, however it did not detail how much this would amount to. Looking to next year, the company expects Penn to add between 12 cents to 18 cents to per-share earnings.
The latest deal comes after one announced it September, in which Kirby agreed to acquire Allied Transportation Co. and two affiliated companies for about $116 million in cash in a bid to expand the petrochemical segment of its offshore business.
Shares of Kirby closed Tuesday at $56.23 and were inactive premarket. The stock has fallen 15% so far this year.
– Saabira Chaudhuri, (c) Dow Jones & Company