Kirby Corp. is buying United Holdings LLC in a significant expansion of the barge operator’s diesel engine service segment and a move into the onshore oil and gas business.
The $270 million cash deal, expected to close in April, is the second major purchase Houston-based Kirby has announced this month. It earlier agreed to buy the ship bunkering operations of Enterprise Marine Services LLC, Miami, for about $53 million in cash. That transaction includes 21 inland and offshore tank barges and 15 inland towboats and offshore tugboats.
United Holdings, based in Oklahoma City, Okla., distributes and services engines and transmission products and makes oilfield service equipment including those used in hydraulic fracturing, which is likely to increase as oil and gas companies do more horizontal drilling. “This acquisition extends our diesel engine service segment into a growing market,” Kirby CEO Joe Pyne said in a conference call. “Shale gas is a game-changer for the U.S. energy industry.”
And the hydraulic fracturing process provides more servicing opportunities. It uses diesel engines, pumps and transmissions “but more strenuously than the typical marine application, with the overhaul cycle about twice as frequent for diesel engines used in this business than for marine propulsion,” Pyne said.
Last year, marine transportation accounted for about 80 percent of Kirby’s revenue and the diesel engine division about 20 percent. Factoring in both Enterprise and United for 2011, the marine component will make up about 65-70 percent of revenue and diesel 30-35 percent.
Kirby’s buying spree is probably not over. “We think we’re in an excellent position to continue to acquire companies in our two core segments and also to continue our barge building program and opportunistic buying of our common stock,” Pyne said.
Kirby’s shares shot up $2.16 to close at $54.21 on Feb. 22, the day the purchase was announced, and a day when the Dow plunged 178 points.