Kirby buys K-Sea in $600M deal

K-Sea to become “a wholly owned subsidiary or Kirby” while keeping their own management in place.

Wall Street Journal:

By Doug Cameron

Kirby Corp. (KEX) on Sunday agreed to buy K-Sea Transportation Partners L.P. (KSP), a move that gives the U.S. petrochemical shipper a presence in the east and west coast markets.

The largest U.S. petrochemical barge operator by revenue is focused on the Gulf coast, Mississippi River and other inland waterways, and is buying K-Sea for $335 million in cash and stock and assuming debt to diversify its business.

K-Sea, which specializes in transporting gasoline and fuel derivatives, also operates in Alaska and Hawaii and eyed expansion into South America.

Kirby has hitherto eschewed any move overseas.

Kirby is the product of more than 40 deals and the agreed purchase of K-Sea comes as the U.S. petrochemical sector boosts production amid firmer domestic demand and exports driven by cheap natural gas.

K-Sea will be run as a standalone unit with existing management and is seen as accretive to Kirby earnings this year, though a five cent per share one-time deal fee led the prospective buyer to leave its 2011 profit guidance unchanged at $2.55 to $2.80.

The proposed deal is backed by a majority of K-Sea unit holders, requires regulatory approval and is slated to close by July.

Kirby has been the sector’s leading consolidator, acquiring and operating barge fleets from major oil and chemicals companies alongside a ship-servicing business, both of which are recovering after a depressed two years for rates and shipments. The company is offering $8.15 in cash for each K-Sea ordinary unit, or $4.075 and 0.0734 Kirby shares for each unit of its target. It’s also refinancing $265 million in K-Sea debt.

K-Sea units–the company converted into a master limited partnership in 2005–ended Friday at $6.47, gaining ground over the past two months but still down almost 30% on a year ago. Kirby shares closed at $55.33.

-By Doug Cameron, Dow Jones Newswires; 312-750-4135;

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WOW! Kirby is buying stuff up quick. They bought the TransMontaine tugs and now K-Sea. I wonder if they will do any hireing?