Alexander & Baldwin(ALEX) announced plans this morningto spin off Matson, its ocean transportation and domestic logistics company. Alexander & Baldwin, which has owned Matson since 1969, is the 4th largest private landowner in
Hawaii, where it owns 88,000 acres. A & B is the largest farmer in the state, a developer of condos and other projects, and owns 7.9 million square feet of commercial space both in Hawaii and on the mainland. For the twelve months ended September 30, 2011, the Company’s real estate and agribusiness segments reported revenues of $371 million and operating profit of $102 million.
Matson is an impressive company as well. For the twelve months ended September 30, 2011, the Company’s transportation and logistics segments reported revenues of $1.5 billion and operating profit of $104 million, and had 1,175 employees. Matson’s assets will include 17 Jones Act vessels; approximately 47,000 company-owned containers and equipment; dedicated terminal facilities in Hawaii; a top ten U.S. logistics company; and a 35 percent interest in SSA Terminals, one of the largest terminal operators on the U.S. West Coast.
The Company expects to complete the transaction in the second half of 2012, leaving shareholders with 1 share in each company for each share they own at the time of the split. A&B will not pay a dividend in order to use its cash flow in its development projects, but Matson is expected to yield reasonable well, with an annual dividend in the $.50-$.70 range.
Management has long acted prudently in its stewardship of some of Hawaii’s premier businesses, and both look to have interesting prospects as they go on their separate paths. The market has been quite positive on the announcement, with the stock up over 15% on the news, one of the largest gains we have seen recently on a spinoff annoucement.
Disclosure: Author holds no position in any stock mentioned. Author has never visited Hawaii. If anyone would like to sponsor a trip for author to see the company’s assets firsthand, he would be happy to report back on his findings.
