Pacific Maritime Magazine - Marine Business for the Operations Sector

By Jim Shaw 

Horizon Selling Assets to Matson, Pasha

 

Started as the first container line, Sea-Land Service, in 1956, Horizon Lines is selling its assets to Matson, Inc. and the Pasha group, and ceasing Puerto Rico service. Photo courtesy of Horizon Lines.

Matson Inc. and Horizon Lines announced Nov. 11 that they've entered into a merger agreement under which Matson will acquire the stock of Horizon, including its Alaska operations and the assumption of all non-Hawaii business liabilities.

Horizon also announced separately Nov. 11 that it has agreed to sell its Hawaii operations to the Pasha Group for $141.5 million and intends to shut down its Puerto Rico liner operations by the end of 2014.

Under the terms of the merger agreement, Matson is to acquire Horizon for 72 cents per share, or $69.2 million, plus the repayment of debt outstanding at closing. The total value for the Transaction is $456.1 million before transaction costs, based on Horizon's outstanding debt as of Sept. 21, 2014, minus the anticipated proceeds from the Hawaii business sale.

Horizon has a long operating history in Alaska. The company deploys three diesel-powered Jones Act qualified containerships and operates port terminals in Anchorage, Kodiak and Dutch Harbor. Its Alaska service consists of two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor. Horizon also has a reserve steam-powered Jones Act containership for drydock relief.

"The acquisition of Horizon's Alaska operations is a rare opportunity to substantially grow our Jones Act business," Matson President & CEO Matt Cox said. "Horizon's Alaska business represents a natural geographic extension of our platform as a leader serving our customers in the Pacific. We are also encouraged by the long-term prospects of the Alaska market, which mirrors Hawaii in many operational ways."

The Boards of Directors of both companies have already approved the transaction and it is expected to close in 2015.

"We wish the Matson team continued success in their new Alaska trade, and we look forward to working with them to close this transaction and provide a seamless transition for our customers," Horizon President & CEO Steve Rubin said.

Horizon says the ceasing of operations and shutting down its Puerto Rico domestic liner service is independent of the Matson deal and that it intends to cease operations between the US and Puerto Rico whether or not the Matson deal is consummated.

Under the terms of the Pasha Group agreement, Pasha will acquire certain subsidiaries of Horizon constituting substantially all of Horizon's Hawaii trade-lane business, including four Jones Act container ships.

"Since Pasha entered the Hawaii transportation circuit nearly 10 years ago, we have elevated the quality of customer service," the company's president and CEO, George Pasha IV, said. "With this acquisition, we will supplement that service and provide an improved, more competitive offering on the Hawaii trade lane."

Horizon Lines was started in 1956 as Sea-Land Service by containerized shipping pioneer Malcolm McLean. A converted World War II T-2 oil tanker, named the Ideal-X, carried the first containers from Newark, New Jersey to Houston, Texas. Two years later, Sea-Land introduced container shipping to the Puerto Rico market and pioneered container shipping to Alaska with the first year-round scheduled vessel service.

 
 

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