LIHUE — Matson Inc., which has the largest share of the U.S. Mainland-to-Hawaii market, said it will buy the Alaska operations of Horizon Lines Inc. for $69 million. Matson will also acquire Horizon’s debt.
Separately, Horizon will sell its Hawaii operations to The Pasha Group for $142 million and shut down its Puerto Rico business.
Matson CEO Matt Cox said in a statement the deal is a rare opportunity to substantially grow the company’s Jones Act business.
“We are also encouraged by the long-term prospects of the Alaska market, which mirrors Hawaii in many operational ways, despite different underlying economic drivers,” Cox said.
The Jones Act requires vessels shipping goods between states to have been built in the United States, be crewed and owned by U.S. citizens, and fly the U.S. flag.
Matson will pay for the deal with cash on hand and revolving credit. The transaction is expected to close next year after Horizon sells its Hawaii business to Pasha.
The companies said the total value of the deal is $456 million, based on Horizon’s net debt outstanding as of Sept. 21, less the anticipated proceeds from the sale of its Hawaii business.
Pasha will pay $141.5 million to acquire the Horizon Hawaii operation. It will continue its own 10-year operation moving civilian and military vehicles and goods between Hawaii and San Diego.
In a press release Tuesday, Pasha Group, a family-owned global logistics and transportation company based in San Rafael, California, said the sale would boost competition in the shipping market.
“Pasha currently represents only a small percentage of shipping volume between the Mainland U.S. and Hawaii,” said Pasha spokesperson Emily Sinclair. “Through this transaction, Pasha will grow to become a significant competitor and provide a viable alternative to Matson on these routes.”
The Securities and Exchange Commission must conclude an antitrust review prior to the sale, after which time she said Pasha will move forward from focusing on the transaction itself, to the terms, ports and other details.
“After closing, Pasha will be able to provide customers with a more attractive, and more competitive offering,” Sinclair said. “This will include a wider choice of higher quality scheduled shipping and logistic services for containers, refrigerated containers and a variety of roll on-roll off cargos.”
Pasha President and CEO George Pasha, IV, echoed those statements.
“Our primary goal is to enrich the transportation services available to our customers,” he said in a press release.
Horizon, which is based in Charlotte, North Carolina, has been serving Alaska with container ships since 1964. The company has two weekly sailings from Tacoma to Anchorage and Kodiak, and a weekly sailing to Dutch Harbor. It has three Jones Act-qualified container ships.
Matson, which has headquarters in Honolulu, serves Hawaii as well as Guam, Micronesia and some South Pacific islands. It also operates a service between China and Southern California. It has a fleet of 21 container ships, combination container and roll-on roll-off ships, and custom-designed barges.
A statement from the Hawaii Department of Transportation said the sale encourages marketplace competition. HDOT said its Harbors Division would continue to work with all partners in shipping cargo to and from the islands and remains committed to a diverse shipping marketplace that provides the best possible service and prices for Hawaii’s consumers.
The Associated Press contributed to this report