Kirby Corp. announced it is paying $419 million to acquire Higman Marine Inc. and its fleet of 30,000-bbl. inland tank barges. Both companies are based in Houston.
Adding Higman’s 159 barges and 75 towboats, with their average ages of seven and eight years respectively, brings one of the industry’s younger fleets into the Kirby fold and enables the company to avoid significant future expense, David Grzebinski, president and CEO of Kirby, said in a statement announcing the deal on Sunday.
“The acquisition of Higman and its young fleet of well-maintained inland tank barges and towboats is an excellent fit with Kirby's operations,” Grzebinski said. Along with the tank barges — about 80% clean and 20% heated black oil vessels — “the addition of Higman's towboats to Kirby's horsepower profile will allow us to avoid significant future capital outlays for new towboats,” he said.
The companies expect to close on the deal in the first quarter of 2018, subject to customary closing conditions. 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.
Grzebinski reiterated the cautiously optimistic 2018 outlook he expressed in Kirby’s recent fourth-quarter 2017 earnings report.
“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," he said. "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.
“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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