International Shipholding Corp. (ISH) said it has agreed to acquire U.S. United Ocean Services, a subsidiary of United Maritime Group, for about $111 million cash.
Founded in 1959, UOS provides marine transportation services for dry bulk and break-bulk commodities in the United States. UOS operates the largest U.S.-flag Jones Act dry bulk fleet today (131,000 deadweight tons), which consists of two handy-size bulkers and four tug/barge units.
The fleet operates under long-term contracts, carrying coal to Tampa Electric (TECO) and phosphate rock for the fertilizer company Mosaic. Both shippers have a relationship with UOS that spans several decades. UOS is also a major carrier of food aid.
"This acquisition will provide ISH with increased scale and a more diverse product offering within the U.S.-flag Jones Act dry bulk transportation market, where ISH maintains a strong position," the company said.
"This acquisition enables management to capitalize on a growth opportunity in a niche market that is expected to be accretive to both earnings and free cash flow," said Niels M. Johnsen, ISH’s chairman and chief executive officer. "Additionally, we anticipate that this transaction will increase our contracted revenue stream to approximately 68 percent of total revenue in 2013.”
ISH plans to operate UOS as a separate subsidiary while retaining its current management team.
The transaction is expected to close in the fourth quarter of 2012. - Chris Dupin