Page 58: of Maritime Logistics Professional Magazine (Q2 2012)

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Trends

The number of acquisitions completed worldwide dipped during the economic downturn that began in 2007, reaching a low in 2009 and increasing steadily in 2010-2011. Figure 1 illustrates this steady upward trend in deal activity, and total deal values experienced a similar dip in 2009 followed by a strong recovery in the past two years.

Publicly-traded companies offer a window into overall company valuations and investment fl ows. The set of public company indices in fi gure 2 indicates the relative share price changes in four marine subsectors over the past 12 months.

The most striking trend in this fi gure is the strong performance of inland and offshore stocks, including companies such as

Kirby Corp (KEX), Tidewater Inc (TDW) and Hornbeck Off- shore Services (HOS). This fl ow of capital into companies that provide water transportation for energy and commodity markets is clearly refl ected in the strong deal fl ow for these segments in the United States.

Inland and Offshore

Small vessel operators on the inland waterways and the Gulf

Coast oil patch are central to the US marine business, par- ticularly with regard to M&A activity. One notable buyer in 2011 was publicly-traded liquid barge carrier Kirby Corpo- ration (KEX), which had several acquisitions including K-

Sea ($600 million), the liquid barge fl eet of Enterprise Ma- rine ($53 million) and engine and equipment provider United

Holdings ($270 million). Throughout 2011, such midstream- related deals dominated the acquisition scene in the US.

Limited partnership Genesis Energy LP added to its Supply and Logistics division with the acquisition of Florida Marine

Transport (FMT) black oil transportation fl eet ($141 million).

Demand for inland barge transportation has remained strong due to increased coal and petrochemical exports. Though the barge business continues to experience seasonal and secular variations, the overall outlook is positive and deals will likely continue to develop. Most recently, Ingram Barge Company announced that it will acquire US United Barge Line, adding about 17 towboats and 650 barges to its fl eet of 100 and 4,000, respectively.

Ports and Terminals

Port and terminal acquisitions have been a critical part of maritime industry deal-making, as investment fi rms and oper- ating companies acquired critical properties to position them- selves for growth in midstream energy transportation. To expand its North American tank terminal business, Lindsay

Goldberg invested $247 million to acquire a 49% interest in each of Norway’s Odfjell Rotterdam- and Houston-based tank terminals as well as in a green fi eld project in Charleston in 2011. Also in 2011, Foresight Energy/Cline Group affi liate

Raven Energy acquired Canadian National Railway’s IC

RailMarine Terminal on the east bank of the Mississippi in

Convent, LA for $73 million.

More recently, Amsterdam-based Trafi gura AG acquired

Texas Docks and Rail terminal and stevedoring of Corpus

Christi to expand their trading and transportation business in

North America. Another terminal and stevedoring company in Houston, Gulf Stream Marine, received a majority recapi- talization from private equity fi rm Cap Street Group.

Vessel Construction and Marine Equipment

Steady consolidation has continued in the shipbuilding and repair sector. General Dynamics expanded its shipbuilding presence with the 2011 acquisition of Metro Machine Corp., a private ship repair facility in Norfolk, VA for $148 million.

On a smaller scale, Arc Lite Power acquired Knight and

Carver shipyard in San Diego for $30 million. A pioneer in hybrid, energy-effi cient vessel designs, Arc Lite will trans- form the facility into the world’s fi rst global hybrid supery- acht conversion and certifi cation center while continuing to conventional marine construction and maintenance services.

In 2012, Vigor Industrial raised $75 million in private equity from Endeavour Capital of Portland and acquired

Alaska Ship and Drydock. Vigor continues to expand in the northwest after its 2011 acquisition of Todd Pacifi c Ship- yards in Seattle for $130 million.

On the marine equipment front, increased demands to comply with environmental regulations have been driving the development of new products, as well as M&A. Power plant giant Wartsila acquired Hamworthy in early 2012, for

F

Finance

Maritime Mergers & Acquisitions By Harry Ward

FINANCE

Mergers and Acquisitions in the American maritime industry are relatively few in number and require careful analysis. It is helpful to examine some overall trends in deal activity and company valuations, and then refl ect on some key transactions in a few defi ning subsectors. 58 | Maritime Professional | 2Q 2012

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