Matson Completes Horizon Lines Acquisition

Matson, Inc. has completed the acquisition of Horizon Lines, Inc. which includes Horizon's Alaska operations and the assumption of all non-Hawaii business liabilities. Separately and immediately preceding the completion of the transaction, Horizon completed the sale of its Hawaii trade lane assets and liabilities to The Pasha Group for $141.5 million.

 

Matson acquired the stock of Horizon for $0.72 per fully diluted common share, or $69 million, and repaid Horizon's outstanding debt, for a total transaction value of $469 million before transaction costs. Matson financed the transaction with cash on hand and available borrowings under its revolving credit facility.

 

Matson will continue Horizon's operations in Alaska with a three vessel deployment of diesel powered Jones Act qualified containerships that provide two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor. In addition, Matson will operate port terminals in Anchorage, Kodiak and Dutch Harbor and acquire several reserve steam powered Jones Act containerships that may be used for dry-dock relief.

 

"We are pleased to have completed this strategic acquisition that substantially grows our ocean transportation business into the attractive Alaska market," said Matt Cox, President and Chief Executive Officer of Matson. "The Alaska market is a natural geographic extension of our platform as a leader serving our customers in the Pacific. We are excited by the long-term prospects of the Alaska trade lane and expect this transaction to deliver shareholder value through earnings and cash flow accretion."

 

Excluding the one-time transaction costs and other restructuring and integration costs, Matson expects the transaction to be accretive to annual earnings per share (EPS), providing low to mid-teens percent annual EPS accretion in years one and two post-closing, and approximately $0.35 to $0.45 of annual EPS accretion thereafter. Within two years post-closing, Matson expects the transaction to contribute approximately $70 million to consolidated annual EBITDA and to be approximately $1.00 accretive to annual cash flow per share.

 

Matson expects one-time pre-tax transaction costs and other restructuring and integration costs of approximately $45 to $50 million of which approximately 65 percent, 30 percent and 5 percent are expected to be incurred in the second quarter 2015, the second half of 2015 and 2016, respectively. Matson intends to update its 2015 outlook for the effects of the transaction during its second quarter 2015 earnings conference call, currently scheduled for early August 2015.