Kirby shares rise Tuesday after United Holdings acquisition announcement; analyst notes that rising use of inland tank barge equipment means more pricing power for operators such as Kirby
February 23, 2011
– Kirby shares rise after it announces deal to buy engine products maker United Holdings
Shares of Kirby Corp. rose Tuesday after the barge operator announced it would buy engine products maker United Holdings LLC, which will add immediately to earnings.
THE SPARK: Kirby said Monday it would pay $270 million in cash for United Holdings, with the potential for another $50 million in 2014 under a so-called earnout provision.
With the deal, Kirby raised its earnings forecast for this year to between $2.55 and $2.80 per share from $2.35 to $2.55 per share.
THE BIG PICTURE: Privately held United Holdings makes engine and transmission products for industrial users in the oil and gas and other businesses. The Oklahoma City company will expand Kirby's diesel engine services business.
THE ANALYSIS: Jefferies & Co. analyst Douglas J. Mavrinac said Kirby's shares were a good value and the company is in good shape to make other acquisitions. He also said rising use of inland tank barge equipment will mean more pricing power for operators such as Kirby.
Mavrinac raised his 2011 profit prediction on Kirby to $2.90 per share from $2.29 per share, and bumped his 2012 income forecast to $3.17 per share from $3.05 per share.
SHARE ACTION: Kirby shares rose $2.16, or 4.2 percent, to close Tuesday at $54.21.
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