AGL Resources (NYSE: GAS ) announced today that it will sell its Tropical Shipping business to privately held Saltchuck Resources for around $220 million. Tropical Shipping transports dry and refrigerated containerized cargo and provides other logistics services.
"We are confident that becoming a member of the Saltchuk family, with their deep roots in the transportation, logistics and maritime industries, will guarantee a continued bright future for Tropical Shipping and its employees and valued customers," said Andrew Evans, executive vice president and CFO for AGL Resources, in a statement today. "We have consistently noted that AGL Resources' strategic focus is on owning and operating regulated natural gas utilities and related assets. While we have been responsible stewards of Tropical Shipping for the duration of our ownership, and have worked diligently to successfully increase profitability over the last two years, we have deliberately sought a more strategic owner for these assets."
Tropical Shipping currently owns 11 vessels serving 25 ports in the U.S., Canada, the Bahamas, Virgin Islands, Cayman Islands, Dominican Republic, Eastern Caribbean and Guyana.
Critics of the subsidiary have pointed out that a natural gas utility has no business owning a Caribbean shipping company. At the same time, proponents applauded AGL's accretive acquisition. In its latest quarterly report, Tropical Shipping was a shining star, reporting 7% annual sales growth and a 50% EBIT increase for FY 2013.
For 2014, AGL Resources had expected Tropical Shipping to contribute around $15 million to $25 million EBIT, although the company will hang on to around $9 million of that through its continued investment in Triton Container.