June 13th 2017
Kirby Corp has expanded its non-shipping activities with the $710m purchase of Stewart & Stevenson, a manufacturer and supplier for several industries including marine and energy.
The Houston tank barge giant said it is buying “substantially all” of the Parman Capital Group subsidiary by using its credit facility and issuing $355m worth of the Jones Act vessel owner’s New York-listed stock.
“The combination of Stewart & Stevenson with Kirby’s existing distribution and services business has the potential to unlock significant strategic value, dampen overall volatility in the business, and create a larger organisation at an opportune time, as the industry continues to recover from a deep downturn,” said Kirby chairman Joe Pyne.
That deal, which will leave Parman as a major shareholder in Kirby, is expected to close in the third quarter.
Kirby chief executive David Grzebinski said the deal broadens the geographic reach of the company’s distribution and services business.
“This transaction creates one of the largest distribution networks in the country with the engineering and technological capacity to successfully address the complex requirements of a large customer base in a competitive national and global environment,” he said.
Market observers have been watching Kirby for its next expansion moves, speculating about fleet expansion possibilities.
Earlier today, Evercore ISI analyst Jonathan Chappell said he sees Kirby’s balance sheet as strong enough to modernise or expand the fleet at the bottom of the market cycle.
“ Yet we fear further downside in the coastal business,” he said.