February 12, 2018
Kirby Corporation, Houston, Texas, announced February 4 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. Grzebinski said Kirby will retain Higman’s employees as part of the acquistion.
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.
Ken Eriksen, senior vice president of Informa Economics, said that as of 2016, Kirby had 876 tank barges and 207 towboats; the acquisition brings its fleet of barges to more than 1,000 and towboats to nearly 300. 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 CEO. “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.
“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.”
Kirby said it anticipates that the Higman fleet will contribute approximately $130 million to $150 million in revenue, but that will vary depending on market conditions and the timing required to improve Higman's operating utilization.
“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,” Grzebinski said. “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."
Higman was founded in Houston, Texas, in 1917, when an Orange, Texas, pharmacist, J.W. Higman, and a partner Louis Smaihall, formed Higman Towing Company to move logs on the Sabine River to an Orange lumber mill, and water to various Louisiana locations. The firm started with two small tugs and three barges. As the demand for the movement of crude oil and petroleum products grew, the company said it shifted its focus accordingly.
In 1953, Higman bought three boats and 10 barges, the entire marine fleet of the former Pan American Refining Company. Higman said that from the 1960s to the 1990s, the company modernized its fleet, adding new boats and barges. In 1997, Higman acquired Maryland Marine Inc., which expanded the fleet by 40 percent. In recent years, the firm had continued building boats and barges, increasing both horsepower and barge capacity.
In 1992, Higman celebrated its 75th year by christening the industry's first crude oil tows fully constructed to comply with all requirements of the Oil Pollution Act of 1990.