HONOLULU, June 6, 2013 /PRNewswire/ -- Alexander
& Baldwin, Inc. (NYSE:ALEX) ("A&B" or "Company") and
Grace Pacific Corporation ("Grace") today announced that they have
entered into a definitive merger agreement for A&B to acquire
the privately held Grace for a combination of stock and cash valued
at $235 million. A&B also will be
assuming projected net debt of approximately $42 million at closing. Grace is the State's
preeminent infrastructure company, providing aggregate, hot mix
asphalt and road construction and paving services. Grace was
founded in Hawaii in 1931, and its
operations are based exclusively in Hawaii.
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"A&B has long been involved in building communities in
Hawaii. The addition of Grace to
the Company will extend our capabilities to encompass
infrastructure development and replacement work, for which we see a
steady and growing need in Hawaii.
Grace's strong, difficult-to-replicate business model, diverse
payer base and steady and growing cash flows will increase our
local market presence, provide A&B with additional financial
capacity to execute on new real estate opportunities in
Hawaii, and allow us to initiate a
modest quarterly cash dividend," said Stanley M. Kuriyama, A&B's chairman and
chief executive officer.
"The opportunity to acquire a leading materials and
infrastructure firm represents not only an attractive investment in
its own right, but an ideal complement to our existing Hawaii-focused real estate business,"
continued Kuriyama. "There are very few opportunities to acquire a
business in Hawaii that is as
large and successful as Grace and we look forward to this next
important step in the future growth and success of Alexander &
Baldwin."
"Given our strong financial performance as an independent,
employee-owned entity, we were not actively looking to sell Grace,"
noted David C. Hulihee, chairman and
chief executive officer of Grace Pacific Corporation. "However, by
joining forces with A&B, we will be better able to leverage our
combined market knowledge, expertise, asset base and financial
strength to capitalize on growth opportunities presented by the
improving performance of Hawaii's
economy. An equally important consideration for the Grace
shareholders and our employees is that Grace is being acquired by a
142-year old Hawaii-based and
managed company that has the highest reputation for integrity and
commitment to our community. It is doubtful we would have even
considered a sale to another company were it not for the respect
and confidence we have in A&B and its leadership team and their
ability to embrace Grace's Hawaiian roots and corporate
culture."
Grace has approximately 550 employees and 135 shareholders.
Seventy-one percent of Grace's shares are held by five
shareholders, including A&B Director Walter Dods, who owns about 12% of Grace.
Another A&B director, Jeff Watanabe, holds a 1% interest
in Grace. The transaction was unanimously approved by special
committees and the boards of directors of each company, consisting
of directors who did not have interests in Grace.
Subsequent to closing, A&B anticipates that it will initiate
a quarterly cash dividend of $0.04
per share, subject to board approval.
Hawaii's outlook for
infrastructure construction is positive resulting from both
announced infrastructure replacement projects and anticipated
commercial and residential development activities. The Honolulu City & County, for example,
recently announced its intent to perform $120 million to $150 million in road repairs to
the city's streets in each of the next five years. Grace's revenue
increased by over 20% for the six months ended March 31, 2013, compared to the same period last
year, reflecting this growth. (Grace has a fiscal year of
October 1 to September 30.)
As measured by revenue, Grace is one of Hawaii's largest construction firms. Grace's
trailing 12-month revenue through March 31,
2013 totaled $212 million.
Grace's vertically integrated, wholly-owned and joint venture
operations include quarries on Oahu and Molokai, a liquid asphalt import terminal on
Oahu, and hot mix and paving
operations on all of Hawaii's
major islands. Grace provides paving services to a wide variety of
customers, including federal, state and county governments, private
developers and other construction firms. Grace's operations also
include Hawaii's largest road
safety and transportation construction services contractor and
Hawaii's only precast/prestressed
concrete building materials manufacturer. Grace also currently owns
and operates Mid Pac Petroleum, a fuel distribution and retailing
company, which will be spun off to Grace's existing shareholders
prior to the close of the transaction and, thus, will not be
acquired by A&B. Jim Yates will
continue to serve as Mid Pac Petroleum's president and chief
executive officer post spin-off. (All financial and other
information for Grace contained in this release excludes Mid Pac
Petroleum.)
In addition to leveraging Hawaii's prospects for growth in development
and infrastructure construction, A&B is expected to benefit
from:
- Grace's unique assets, which include fee simple
ownership of 800 acres in Hawaii,
encompassing 532 acres on Oahu's
growing leeward coast. The Oahu
landholdings include a 50-acre former processing site located in
the heart of Oahu's second city,
Kapolei, with mid-term
redevelopment potential. Grace's Makakilo, Oahu quarry facility is nearing completion of
a multi-year, $30 million capital
improvement program, including three new crushing and finishing
plants, which is expected to result in greater operational
efficiencies going forward. The Oahu quarry reserves are adequate to meet most
of Grace's projected needs for at least two decades.
- Grace's significant, reliable and growing cash flow
stream, which will not only enhance A&B's ability to expand
its real estate investment activities in Hawaii, but will enable A&B to initiate a
quarterly dividend.
- Grace's expanded opportunities for growth that will be
further enhanced by leveraging A&B's strong balance sheet and
relationships.
- Grace's expertise in quarry management and operations,
which is expected to help A&B realize greater value, over time,
from quarries it already owns on Maui and Kauai.
- Grace's modest capital needs over the next several
years, due to the completion of the recent capital investments made
by Grace in its business.
No reduction in Grace's workforce is anticipated as a result of
the transaction, and David Hulihee
will continue to serve as Grace's chief executive officer.
Transaction Terms
The purchase price of $235 million
is subject to adjustment at closing. Consideration will consist of
85% A&B common stock and 15% cash, subject to adjustment at
closing. A&B also will assume approximately $42 million of debt, net of cash on hand, at
closing. The number of A&B shares to be issued at closing will
be determined by the 20-day volume weighted average price of
A&B shares shortly prior to closing, subject to a $31.50 to $37.50 collar. Accordingly, A&B
will issue at closing not more than approximately 6.34 million
shares and not less than approximately 5.33 million shares.
Approximately 71% of the shares issued at closing will be subject
to a six-month lockup from the closing date. The transaction is
expected to be accretive to A&B's per share earnings for the
first full year following closing.
The transaction is subject to the filing and effectiveness of a
registration statement on Form S-4 with the Securities and Exchange
Commission, the satisfaction of customary closing conditions and
approval of both parties' shareholders. Grace shareholders owning
approximately 71% of Grace shares have agreed to vote in favor of
the transaction. The transaction is expected to be completed in the
fourth quarter of 2013.
Webcast
The Company will host a webcast on Friday, June 7, 2013, at 8:00 a.m. Eastern Daylight Time, to discuss the
transaction. The webcast presentation will be followed by questions
from investors invited to participate in the interactive portion of
the discussion. Parties listening via the webcast will be in a
"listen-only" mode. Access to the webcast will be via a link called
"Grace Pacific Corporation Transaction" on the home page and the
investor relations page of A&B's corporate website at
www.alexanderbaldwin.com. Presentation slides will be available for
download from A&B's website at 7:30 a.m.
EDT.
About Alexander & Baldwin, Inc.
Alexander & Baldwin, Inc. is a premier Hawaii land company, with interests in real
estate development, commercial real estate and agriculture. With
ownership of over 87,000 acres in Hawaii, A&B is the state's fourth largest
private landowner, and is one of the state's most active real
estate investors. A&B has a diverse portfolio of real estate
development projects throughout Hawaii, and a commercial property portfolio
comprising eight million square feet of leasable space in
Hawaii and on the U.S. mainland.
It is also the owner and operator of the Hawaiian Commercial &
Sugar plantation on Maui, and a
significant provider of renewable energy on the islands of
Maui and Kauai. Additional information about A&B
may be found at www.alexanderbaldwin.com.
About Grace Pacific Corporation
One of Hawaii's largest locally
owned construction companies and its largest asphalt paving
contractor, Kapolei-based Grace
Pacific Corporation has roughly 550 employees and an 88-year
history of serving Hawaii.
Throughout the years, Grace Pacific
has constructed and maintained the roads and highways that have
become an integral part of Hawaii's transportation infrastructure.
Grace Pacific also offers a wide
range of construction-related materials and services including
prestressed and precast concrete products, metal framing systems
for construction, custom specialty signage, and traffic and roadway
safety products. Additional information about Grace Pacific may be found at
www.gracepacificcorp.com.
Forward-Looking Statements
Statements in this press release that are not historical facts
are "forward-looking statements," within the meaning of the Private
Securities Litigation Reform Act of 1995, that involve a number of
risks and uncertainties that could cause actual results to differ
materially from those contemplated by the relevant forward-looking
statement. These forward-looking statements are not guarantees of
future performance. This release should be read in conjunction with
of Alexander & Baldwin, Inc.'s 2012 Annual Report on
Form 10-K and other filings with the SEC through the date of
this release, which identify important factors that could affect
the forward-looking statements in this release. We do not undertake
any obligation to update our forward-looking statements.
Participants in Solicitation
Alexander & Baldwin and its directors and officers may be
deemed to be participants in the solicitation of proxies from the
Company's shareholders with respect to the special meeting of
A&B shareholders that will be held, at which shareholders will
be asked to consider the proposed issuance of A&B shares in the
transaction. Information about Alexander & Baldwin's directors
and executive officers and their ownership of Alexander &
Baldwin's common stock is set forth in the proxy statement for
Alexander & Baldwin's Annual Meeting of Shareholders, which was
filed with the SEC on April 2, 2013.
Shareholders may obtain additional information regarding the
interests of Alexander & Baldwin, Inc. and its directors and
executive officers in the proposed transaction, which may be
different than those of A&B's shareholders generally, by
reading the proxy statement/prospectus and other relevant documents
regarding the proposed transaction, when filed with the SEC.
Where to Find Additional Information
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. A&B will file a registration statement on
Form S-4 that includes a proxy statement/prospectus and other
relevant documents in connection with the proposed transaction.
INVESTORS ARE URGED TO CAREFULLY READ THE PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION, THE
COMPANY AND GRACE. Investors may obtain a free copy of the proxy
statement/prospectus and other filings containing information about
the proposed transaction, the Company and Grace, free of charge, at
the website maintained by the SEC at www.sec.gov after such
documents have been filed with the SEC. In addition, after such
documents have been filed with the SEC, copies of the proxy
statement/prospectus and other filings containing information about
the proposed transaction, the Company and Grace can be obtained
without charge by sending a request to Alyson J. Nakamura, A&B corporate secretary,
c/o A&B Law Department, 822 Bishop Street, Honolulu, Hawaii 96813; or by accessing them
on the Company's web site at http://www.alexanderbaldwin.com.
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Contact:
Suzy
Hollinger
808.525.8422
shollinger@abinc.com
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SOURCE Alexander & Baldwin, Inc.