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Kirby to acquire Higman Marine for $419 million

Feb 5, 2018 09:09 AM

The deal includes 75 inland towboats, allowing Kirby to avoid 'significant' outlays for newbuilds

The following is a news release from Kirby Corp.:

(HOUSTON) — Kirby Corp. on Sunday announced the signing of a definitive agreement to acquire Higman Marine Inc. and its affiliated companies for approximately $419 million in cash, subject to certain closing adjustments. The purchase will be financed through additional borrowings. 

Higman's marine transportation fleet consists of 159 inland tank barges with 4.8 million barrels of capacity, and 75 inland towboats. Higman's fleet moves petrochemicals, refined petroleum products, crude oil, natural gas condensate, and black oil on the Mississippi River System and Gulf Intracoastal Waterway for large midstream and global integrated oil companies. The closing of the acquisition is expected to occur in the first quarter and is subject to customary closing conditions.

"The acquisition of Higman and its young fleet of well-maintained inland tank barges and towboats is an excellent fit with Kirby's operations," said David Grzebinski, Kirby's president and chief executive officer. "Higman's inland fleet of 30,000 barrel tank barges, approximately 80 percent of which are clean and 20 percent heated black oil vessels, has an average age of seven years, and is one of the younger fleets in the industry. With an average age of eight years, the addition of Higman's towboats to Kirby's horsepower profile will allow us to avoid significant future capital outlays for new towboats."

Grzebinski continued, "Depending on the purchase price allocations, we expect this acquisition will be earnings neutral in 2018 as it will take time to align Higman's tank barge utilization rates with Kirby's, and industry pricing has not yet improved from historically low levels. Additionally, while debt levels will increase in the near term, Kirby's financial policies remain unchanged, and we expect to rapidly deleverage post-acquisition, which is consistent with our history."  

Grzebinski concluded, "Overall, as the inland market begins its recovery, the timing of the Higman acquisition is ideal as it will further upgrade our fleet and ultimately allow Kirby to emerge from the downturn larger, more efficient, and better able to serve our customers. As the cycle improves, and we realize the benefits of integration efficiencies and synergies, this acquisition will improve the earnings potential for Kirby in the future."

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