Kirby acquires Stewart & Stevenson for $756.5M
Kirby (KEX) closed the acquisition of substantially all of the assets and businesses of Stewart & Stevenson for approximately $756.5M, before post-closing adjustments. The purchase was funded with 5.7 million shares of Kirby common stock valued at $366.6M and $377.0M in cash through Kirby’s revolving credit facility, as well as assumed debt of $12.9M.
The company expects the transaction to be 2c-4c per share accretive to Q4 EPS. The full benefit from the earnings contribution is likely to be partially offset in the quarter by one-time integration and transaction-related expenses. Kirby will include a more definitive earnings assessment of Stewart & Stevenson in its 2018 full year guidance on its Q4 earnings call in January.
Kirby Corporation operates domestic tank barges in the United States. The company’s Marine Transportation segment provides marine transportation services and towing vessels transporting bulk liquid products, as well as operates tank barges throughout the Mississippi River System, on the Gulf Intracoastal Waterway, coastwise along three United States coasts, and in Alaska and Hawaii.
Stewart & Stevenson, founded in 1902, is a manufacturer and distributor of products and services for the oil and gas, marine, construction, power generation, transportation, mining and agricultural industries. The company serves domestic and global markets with equipment, rental solutions, parts, and service through a strategic network of sales and service centers in domestic and international locations.
Kirby announced that Hurricanes Harvey and Irma caused little damage to Kirby vessels and minor flooding to one facility.
CEO Grzebinski stated, “Harvey has significantly dislocated normal supply and distribution routes in our inland barge business. Ports from Corpus Christi to Houston started closing on August 23rd, and began reopening on September 1st.
Irma has also significantly disrupted our offshore business. We expect lost revenues and costs associated with recovery efforts for both hurricanes to impact Q3 EPS by 6c-8c per share.
For Harvey, the lost revenues have been partially offset by an increase in our vessel utilization as the U.S. Gulf Coast petrochemical and refinery complex returns to normal operations.
As such, we believe Q3 earnings results will fall within our previously provided guidance range, although towards the low end after the negative impact from the storms.” The company had seen Q3 EPS of 40c-55c, consensus is 48c.
KEX has a 52-weeks trading range of $55.09 – $74.50. Shares last traded at $64.33.
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