Kirby Expands To Coasts With K-Sea Barge Buy
March 13 2011 - 10:28PM
Dow Jones News
Kirby Corp. (KEX) on Sunday agreed to buy K-Sea Transportation
Partners L.P. (KSP), a move that gives the U.S. petrochemical
shipper a presence in the east and west coast markets.
The largest U.S. petrochemical barge operator by revenue is
focused on the Gulf coast, Mississippi River and other inland
waterways, and is buying K-Sea for $335 million in cash and stock
and assuming debt to diversify its business.
K-Sea, which specializes in transporting gasoline and fuel
derivatives, also operates in Alaska and Hawaii and eyed expansion
into South America.
Kirby has hitherto eschewed any move overseas.
Kirby is the product of more than 40 deals and the agreed
purchase of K-Sea comes as the U.S. petrochemical sector boosts
production amid firmer domestic demand and exports driven by cheap
natural gas.
K-Sea will be run as a standalone unit with existing management
and is seen as accretive to Kirby earnings this year, though a five
cent per share one-time deal fee led the prospective buyer to leave
its 2011 profit guidance unchanged at $2.55 to $2.80.
The proposed deal is backed by a majority of K-Sea unit holders,
requires regulatory approval and is slated to close by July.
Kirby has been the sector's leading consolidator, acquiring and
operating barge fleets from major oil and chemicals companies
alongside a ship-servicing business, both of which are recovering
after a depressed two years for rates and shipments. The company is
offering $8.15 in cash for each K-Sea ordinary unit, or $4.075 and
0.0734 Kirby shares for each unit of its target. It's also
refinancing $265 million in K-Sea debt.
K-Sea units--the company converted into a master limited
partnership in 2005--ended Friday at $6.47, gaining ground over the
past two months but still down almost 30% on a year ago. Kirby
shares closed at $55.33.
-By Doug Cameron, Dow Jones Newswires; 312-750-4135;
doug.cameron@dowjones.com
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