Alexander & Baldwin Inc. said today its board of directors has approved a plan to split the company into two separate companies, one focusing on real estate and agriculture and the other on shipping.
The two companies would be independent and publicly traded, the company said in a news release.
Under the plan, A&B shareholders will own one share of both A&B and Matson stock for each share of company stock owned. The separation is expected to be completed in the second half of 2012.
The announcement was made after the market closed. A&B’s shares rose $1.50 to $39.56 in after hours trading.
“Over the past decade, Alexander & Baldwin’s board of directors and management have periodically conducted strategic reviews, including an evaluation of the merits of separating into two companies,” said Walter Dods, A&B’s chairman. “After thorough evaluation, we have concluded that the increased size, capabilities and financial strength of both our land and transportation businesses now enable these operations to independently execute their strategies to maximize shareholder value.”
Honolulu-based A&B has grown substantially over the past decade. Its commercial real estate portfolio has increased by almost 50 percent to its present size of 7.9 million square feet, comprising 44 properties in Hawaii and eight mainland states. The portfolio of commercial properties generates a significant and stable source of cash flow for the company, and is an important source of capital for A&B’s real estate investment and development activity.
During the same time period, A&B has expanded and diversified its pipeline of development projects and broadened its development capabilities. Since 2000, the company has invested about $800 million in development projects — including three high-rise condominiums in urban Honolulu and resort destination communities in Hawaii, such as the Wailea Resort on Maui and Kukui’ula on Kauai — and an additional $850 million in the acquisition of Hawaii and mainland commercial properties, mainly through property exchanges.
Sand Island-based Matson will consist of Matson Navigation Co. and Matson Logistics Inc. Matson’s assets include 17 vessels and about 47,000 company-owned containers, dedicated terminal facilities in Hawaii, and one of the largest terminal operators on the U.S. West Coast, according to A&B. Matson Navigation is a major shipper in the Pacific, serving Hawaii, Guam, Micronesia, the U.S. West Coast, and China. Matson became a subsidiary of A&B in 1969.
“This separation will create two financially strong public companies, each with more than $1 billion in assets, a thousand employees, strong balance sheets and cash flow to fund future growth,” Dods said today. “We have reached the point in the growth and development of each of our businesses where they can better achieve their full potential by operating as separate companies.”