Kirby Corp. is acquiring Penn Maritime Inc. in a $295 million
deal that includes a fleet of modern ATBs on the East and Gulf coasts and
complements Kirby’s roster of inland tank barge customers.
cash and stock transaction is expected to close by late-December.
Conn.-based Penn operates 18 heated, double-hulled tank barges, with a capacity
of 1.9 million bbls. and an average age of 13 years, and 16 tugs that move
refinery feedstocks, asphalt and crude oil. Penn Maritime is the largest
coastal transporter of heated asphalt products.
utilization is in the mid-80-percent range with annual revenue of about $122
million, Kirby officials told analysts Wednesday. The acquisition adds product
diversity to the coastal operations of Kirby, the nation’s largest domestic
tank barge operator. The two companies serve many of the same oil companies and
believe the transaction is very attractive for Kirby,” Jefferies analyst Douglas Mavrinac said in a note titled “Kirby
Strikes Again.” The price makes sense “as we believe the U.S. Jones Act coastal
business is in a cyclical recovery due to a combination of improving demand
driven in part by domestic crude oil movements and fleet retirements which is
improving utilization levels closer to the mid-80-percent range that is needed
to generate pricing power.”
CEO Joe Pyne said Penn “was a healthy company financially. It was prudently
run. They could have continued to grow.”
is the second deal in the last few months that expands Kirby’s coastal
business. In September, Kirby announced the $116 million cash purchase of Allied Transportation Co. with its
fleet of 10 coastwise tank barges with a liquid capacity of 680,000 bbls.,
three offshore dry-bulk barges with a capacity of 48,000 dwt, and seven tugs.
acquisition discussions began about a year ago, and Pyne gave assurances that
Penn’s fleet is in good shape. “The level of due diligence was significantly
more than we were allowed in the K-Sea acquisition, so we don’t anticipate any
surprises,” he said. The K-Sea
Transportation Partners fleet was in worse shape than anticipated in the
$600 million deal last year and cost Kirby money for maintenance and repairs as
well as lost revenue days.
also warned about the “challenging” low-water levels on the Mississippi and
Illinois rivers because of the drought, and raised the specter of impassable
conditions this winter.
estimated the light loading and other temporary solutions as well as disruptions
from Hurricane Sandy on the East Coast could hurt earnings by 4-5 cents in the