Two business transactions announced Tuesday will significantly change the seascape of the shipping industry in Hawaii.
Matson Inc., which has the largest share of the U.S. mainland-to-Hawaii market, said it will buy Horizon Lines Inc. for $69 million. Matson also will acquire Horizon’s debt.
Separately, Horizon will sell its Hawaii operations to The Pasha Group for $141.5 million and shut down its Puerto Rico business.
Matson CEO Matt Cox said in a statement the deal is a rare opportunity to increase the company’s business regulated by the Jones Act, which 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.
“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 companies placed the total value of the deal at $456 million, based on Horizon’s net debt outstanding as of Sept. 21, minus the anticipated proceeds from the sale of its Hawaii business.
Matson will use cash on hand and revolving credit to finance the deal, which is expected to close next year after Horizon sells its Hawaii business to Pasha.
Charlotte, N.C.-based Horizon has served Alaska with container ships since 1964. The company has two ships per week from Tacoma, Wash., to Anchorage and Kodiak, plus a weekly sailing to Dutch Harbor. It has three Jones Act-qualified diesel container ships.
Matson, which is headquartered in Honolulu, serves Hawaii, 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.
Horizon Chairman David N. Weinstein said in a statement its two transactions “will place our company in the hands of strong stewards with reputations for outstanding customer service.”
“Matson has over 130 years of shipping experience and is guided by a rich history of integrity and innovation,” he said. “Pasha is a third generation, family-owned business with a proud heritage of excellence and deep ties to the Hawaiian community. Both Matson and Pasha are well-positioned to serve our valued customers.”
Horizon’s Hawaii business will operate alongside Pasha’s existing operations, according to a Pasha statement.
“Since Pasha entered the Hawaii transportation circuit nearly 10 years ago, we have elevated the quality of customer service,” said George Pasha IV, president and CEO. “With this acquisition, we will supplement that service and provide an improved, more competitive offering on the Hawaii trade lane.”
The Associated Press contributed to this article.