Matson, Inc. (NYSE: MATX) has announced that its subsidiary Matson Logistics, Inc. and Span Alaska, a provider of Less-than-Container Load (LCL) freight consolidation and forwarding services to Alaska, have entered into a definitive agreement in which Matson Logistics will acquire 100% of the equity of Span Alaska Transportation, LLC, for a cash purchase price of $197.6m.
Matson expects to fund the transaction from available borrowings under its $400m revolving credit facility, of which $345m is currently unused. The transaction is expected to close in the third quarter of 2016, subject to Hart-Scott-Rodino waiting period and other customary closing conditions. Matson also announced that it has entered into a commitment letter under which it expects to issue $200m 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 the company’s revolving credit facility and for general corporate purposes.
Span Alaska’s current estimated annual EBITDA is approximately $21m, however, Matson 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.
“The acquisition of Span Alaska underscores Matson’s long term commitment to Alaska and our mission to move freight better than anyone,” said Matt Cox, President and CEO of Matson. “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 management team and operate under the Span Alaska banner, independent of Matson’s ocean transportation operations.”
Matson has stated that in addition to the acquisition, the company is also currently funding its existing fleet renewal commitments, and will consider additional fleet investments.
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