International Shipholding Corporation (NYSE: ISH) announced today that it has entered into a definitive agreement to acquire a 100% ownership interest in U.S. United Ocean Services, LLC (“UOS”), a wholly-owned subsidiary of United Maritime Group, LLC (“UMG”), for a total purchase price of approximately $111 million cash, subject to customary closing adjustments.
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 dead weight tons), which consists of two handysize bulkers and four tug/barge units. The fleet operates under long-term contracts with Tampa Electric (“TECO”) and The Mosaic Company (“Mosaic”), both of whom have maintained longstanding relationships with UOS that have spanned several decades.
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 acquisition fits within ISH’s core growth strategy of acquiring assets to fill niche market needs, expanding contracted revenue with quality counterparts, and broadening customer relationships.
Mr. Niels M. Johnsen, ISH’s Chairman and Chief Executive Officer, stated, “We are pleased to acquire United Ocean Services from United Maritime Group, a leader in dry bulk coastwise transportation in the United States for over 50 years. 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. The addition of these vessels strengthens our presence and improves our operating efficiencies in the U.S. Flag Jones Act dry bulk market. Additionally, we anticipate that this transaction will increase our contracted revenue stream to approximately 68% of total revenue in 2013.”ISH plans to operate UOS as a separate subsidiary while retaining its current management team.