• ITVI.USA
    15,948.420
    108.680
    0.7%
  • OTLT.USA
    2.798
    -0.001
    0%
  • OTRI.USA
    22.010
    -0.060
    -0.3%
  • OTVI.USA
    15,936.600
    100.010
    0.6%
  • TSTOPVRPM.ATLPHL
    2.950
    -0.570
    -16.2%
  • TSTOPVRPM.CHIATL
    3.610
    0.650
    22%
  • TSTOPVRPM.DALLAX
    1.370
    -0.240
    -14.9%
  • TSTOPVRPM.LAXDAL
    3.550
    0.210
    6.3%
  • TSTOPVRPM.PHLCHI
    2.320
    0.220
    10.5%
  • TSTOPVRPM.LAXSEA
    4.110
    0.250
    6.5%
  • WAIT.USA
    126.000
    0.000
    0%
  • ITVI.USA
    15,948.420
    108.680
    0.7%
  • OTLT.USA
    2.798
    -0.001
    0%
  • OTRI.USA
    22.010
    -0.060
    -0.3%
  • OTVI.USA
    15,936.600
    100.010
    0.6%
  • TSTOPVRPM.ATLPHL
    2.950
    -0.570
    -16.2%
  • TSTOPVRPM.CHIATL
    3.610
    0.650
    22%
  • TSTOPVRPM.DALLAX
    1.370
    -0.240
    -14.9%
  • TSTOPVRPM.LAXDAL
    3.550
    0.210
    6.3%
  • TSTOPVRPM.PHLCHI
    2.320
    0.220
    10.5%
  • TSTOPVRPM.LAXSEA
    4.110
    0.250
    6.5%
  • WAIT.USA
    126.000
    0.000
    0%
American ShipperShipping

Matson Logistics enters $197.6m agreement to acquire freight transport services provider

The Honolulu-based shipping company has entered into an agreement to acquire Span Alaska, which has doubled in size during the past year through the acquisition of Pacific Alaska Freightways.

   Honolulu-based shipping company Matson, Inc. said Monday its subsidiary Matson Logistics, Inc. has entered into an agreement to acquire the forwarder and consolidation company Span Alaska for $197.6 million.
   Matson expects to close the deal in the third quarter of 2016, subject to a Hart-Scott-Rodino waiting period and other customary closing conditions.
   The deal comes slightly over a year after Matson entered the Alaska market by acquiring the Alaska business of Horizon Lines on May 29, 2015.
   Matson said Span Alaska, which is owned by the private equity firm Evergreen Pacific Partners, is its biggest northbound customer to Alaska, and has been a customer of Matson or Horizon for 30 years.
   Span Alaska has doubled in size during the past year through the acquisition of Pacific Alaska Freightways. Its competitors include, America Fast Freight, Lynden, Carlile Transportation, Alaska Express Service and Alaska Traffic Co. Span Alaska’s website says it and its related companies ship more than 200 million pounds of freight annually to Alaska.
   Matt Cox, president and CEO of Matson, noted that Carlile is owned by Saltchuk, the owner of the Alaska roll-on/roll-off shipping company TOTE Maritime Alaska, and Lynden is affiliated with barge operator American Marine Lines, which offers barge service to both Alaska and Hawaii.
   “With this acquisition, Matson will be essentially integrating into the forwarding market in a similar manner,” he said.
   Matson plans to continue to use the Span Alaska brand and Cox said the only integration will be in accounting finance systems. He expressed confidence in Span’s management team and said no headcount reduction was planned.
   Matson expects to fund the purchase from its revolving credit facility, but also said it has entered into a commitment letter under which it expects to issue $200 million of 15-year senior unsecured notes at a fixed interest rate of 3.14 percent within the next 60 days. Proceeds of the Notes are expected to be used to pay down that revolving credit facility and for general corporate purposes.
   “The acquisition of Span Alaska underscores Matson’s long term commitment to Alaska and our mission to move freight better than anyone,” Cox said. “This investment will significantly expand Matson Logistics’ platform into freight forwarding in Alaska, where Span Alaska’s market leading value-added LCL consolidation model and focus on customer service and reliability will further solidify Matson’s position as a critical freight transportation provider to Alaska. As a subsidiary of Matson Logistics, Span Alaska will continue to be led by its experienced management team and operate under the trusted Span Alaska banner, independent of Matson’s ocean transportation operations.”
   Tom Souply, the president of Span said, “This acquisition provides strategic growth in an important new market for Matson and will join two companies that are a great fit culturally. Both companies have deep, successful histories, pride themselves on providing superior customer service and reliability and are fiercely loyal to their customers.”
   Cox took pains to mention that Matson Logistics does not offer forwarding services to Hawaii, and is not interested in doing so. He noted that unlike in Alaska where the forwarding business is concentrated among a few companies, some of which are affiliated with ocean carriers, in the U.S. mainland-Hawaii business, forwarding is much more fragmented.
   Founded in 1978, Span Alaska is an asset-light logistics business that aggregates customers’ freight in Auburn, Wash. near Tacoma for consolidation and shipment to seven terminals in Alaska where the freight is deconsolidated before final delivery. It has two terminals in Anchorage and one each in Kodiak, Juneau, Kenai, Wasilla and Fairbanks. Span Alaska’s business is more weighted towards moving products such as groceries and consumer staples than products for the oil and gas industry, for example. Span Alaska will continue to use  other ocean carriers to Alaska in addition of Matson, since there are times when those other services may offer a better solution for shippers – for example, a customer may not have a need to move a product quickly and barge transportation might be more economical.
   As a complement to its core LCL services, Span Alaska provides trucking services which include drayage to and from the Port of Tacoma and delivery to customers’ final destinations in Alaska.
   Matson said it expects one-time pre-tax transaction closing and integration costs of approximately $4 million to $5 million in the second half of this year but the integration to be substantially complete by year-end 2016.
   Matson said Span Alaska’s current estimated earnings before interest, taxes, depreciation and amortization (EBITDA) “run rate is approximately $21 million on an annual basis, but that it “expects the business to trend somewhat lower over the next year or two based on an anticipated more challenging macroeconomic and freight environment in Alaska.” Matson last year had an EBITDA of $302.1 million.
   Excluding the one-time items noted below, Matson expects the deal to boost earnings per share by 10-12 cents per share. In 2015, Matson had diluted earnings per share of $2.34 last year.

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.

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