Matson to acquire Horizon's Alaska operations in $456 million deal


The following is the text of a news release from PRNewswire:

(HONOLULU) (Nov. 11) — Matson Inc. and Horizon Lines Inc. today announced that they have entered into a definitive merger agreement pursuant to which Matson will acquire the stock of Horizon, which will include its Alaska operations and the assumption of all non-Hawaii business liabilities (the "transaction"). Separately, Horizon today also announced that it has agreed to sell its Hawaii operations to The Pasha Group for $141.5 million (the "Hawaii business sale") and intends to shut down its Puerto Rico liner operations by the end of 2014. 

Under the terms of the transaction, Matson will acquire Horizon for $0.72 per fully diluted common share, or $69.2 million, plus the repayment of debt outstanding at closing. The total value for the transaction is $456.1 million (before transaction costs), based on Horizon's net debt outstanding as of Sept. 21, 2014, less the anticipated proceeds from the Hawaii business sale.

"The acquisition of Horizon's Alaska operations is a rare opportunity to substantially grow our Jones Act business," said Matt Cox, president and chief executive officer of Matson. "Horizon's Alaska business represents a natural geographic extension of our platform as a leader serving our customers in the Pacific. We expect this transaction to deliver immediate shareholder value through earnings and cash flow accretion via significant cost and operating synergies. We are also encouraged by the long-term prospects of the Alaska market, which mirrors Hawaii in many operational ways, despite different underlying economic drivers. Both markets depend on reliable, superior and timely container cargo service as part of vital supply lifelines — hallmarks of the Matson brand."

Steve Rubin, president and chief executive officer of Horizon, commented, "This transaction provides value for our shareholders while upholding our financial commitments. We wish the Matson team continued success in their new Alaska trade and we look forward to working with them to close this transaction and provide a seamless transition for our customers."

The boards of directors of both companies have unanimously approved the transaction, and Horizon shareholders representing 55 percent of the fully diluted equity, which also represents 41 percent of the outstanding voting common stock on Nov. 11, 2014, have agreed to vote their shares in support of the transaction.

Matson will fund the transaction from cash on hand and available borrowings under its revolving credit facility. The transaction is expected to close in 2015 after the completion of Horizon's sale of its Hawaii business, Horizon's shareholder approval, and other customary closing conditions. 

In a separate announcement today, Horizon announced that it will cease operations and shut down its Puerto Rico domestic liner service. Horizon's decision to terminate its Puerto Rico service is independent of the transaction, and Horizon intends to cease operations between the U.S. and Puerto Rico whether or not the transaction is consummated.

Overview of Horizon's Alaska operations

Horizon has a long operating history in Alaska, pioneering container shipping into the market in 1964 under the Sea-Land banner. Horizon deploys three diesel-powered Jones Act qualified containerships and operates port terminals in Anchorage, Kodiak and Dutch Harbor. Horizon's Alaska service consists of two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor. In addition to the three vessels deployed, Horizon has a reserve steam-powered Jones Act containership for dry-dock relief.

By Professional Mariner Staff