Kirby buys Allied Transportation for $116 million

Kirby Corp. is buying the assets of Allied Transportation Co. in a $116 million cash deal that diversifies its products and positions Kirby to expand its coastwise petrochemical business.

Houston-based Kirby, the nation’s largest domestic tank barge operator, gets 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 tugboats. Kirby will now have nine offshore dry cargo barges.

Eighty percent of Allied’s business is petrochemicals; the rest is sugar and other dry products, Kirby CEO Joe Pyne said in discussing the transaction Wednesday. The deal is expected to close in the late third or early fourth quarter of 2012.

Customers of Allied, which operates along the Northeast, Atlantic and Gulf coasts, include major petrochemical companies that Kirby also serves inland.

Pyne assured analysts that Allied’s equipment is in good shape in contrast to the vessels that came with last year’s $600 million acquisition of K-Sea Transportation Partners (now Kirby Offshore Marine). “We have thoroughly vetted this equipment which we’re buying and are comfortable it’s well maintained,” he said.

Pyne said that privately held Allied, based in Norfolk, Va., also was in good financial shape and very carefully managed.

K-Sea was a struggling master limited partnership with equipment in worse condition than anticipated, he said earlier this year. The fleet cost Kirby money for maintenance and repair as well as lost revenue days.

Kirby had several months to look over Allied’s equipment and only 10 days to examine K-Sea’s fleet of 58 tank barges and 63 tugboats. “We’re pretty comfortable with what we bought,” Pyne said of Allied.

In addition to the K-Sea deal, Kirby made a number of acquisitions in 2011, including United Holdings for $270 million, which expanded Kirby’s diesel engine service segment and moved it into the onshore oil and gas business.

This year, Kirby is buying Allied and 17 inland tank barges operated by Lyondell Chemical Co., which Kirby was managing. The acquisitions may continue.

“We think that our balance sheet positions us to continue to consolidate the businesses that we’re in,” Pyne said.

He expects the Allied deal to add 6 to 8 cents to 2013 earnings, while the drought and Hurricane Isaac will shave several cents off 2012 third quarter earnings.

Kirby shares Wednesday rose $2.11 to close at $55.99.


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