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Lynden pins hopes on Sitka carrier for Northland purchase

Samson plans to compete with AML if deal goes through

Posted: April 30, 2013 - 5:09pm  |  Updated: May 1, 2013 - 12:04am
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Northland Services Inc., one of two tug and barge companies operating in Juneau, is located on Channel Drive near the mouth of Salmon Creek. Lynden, owner of Alaska Marine Lines, has signed a purchase agreement to buy Northland.  Michael Penn / Juneau Empire
Michael Penn / Juneau Empire
Northland Services Inc., one of two tug and barge companies operating in Juneau, is located on Channel Drive near the mouth of Salmon Creek. Lynden, owner of Alaska Marine Lines, has signed a purchase agreement to buy Northland.

A purchase agreement signed in early April that would place Seattle-based Northland Services under the aegis of the Lynden family of transportation companies may hinge on a Sitka company’s plans to enter the broader Southeast Alaska market, Lynden executives said Tuesday.

Alaska Marine Lines President Kevin Anderson and Alex McKallor, executive vice president and chief operating officer of Anchorage-based Lynden Inc., said they hope to see Samson Tug and Barge take Northland’s place as AML’s Southeast competitor.

“Part of the sale going through is a competitor stepping in, so we want to make sure that … it’s going to work,” said McKallor.

AML is part of Lynden’s family of companies, which also includes Lynden Air Cargo, LTC Inc. and others. Both AML and Northland provide barge service between Alaska and Washington, with Northland also providing service to and from Hawaii.

In order for the purchase of Northland to comply with federal antitrust laws, which prohibit the creation of monopolies through corporate acquisitions and mergers, AML must have a competitor in the Southeast market once Northland becomes a Lynden company and ceases service in Southeast Alaska, McKallor explained.

“Part of the regulatory process will be a requirement to have another competitor here, and it looks like Samson Tug and Barge is going to fill that spot,” McKallor said. “They’ve announced that once the sale is closed, that they will begin service. So really, in effect, from a choice and a competitive situation, there really will be no change, except that Samson will be the alternative to AML.”

Samson, which currently serves only its home port of Sitka among Southeast communities, announced its expansion plans on April 9, the same day Lynden announced the signing of the purchase agreement to acquire Northland. According to the announcement, Samson intends to begin serving Juneau, Ketchikan, Petersburg, Prince of Wales Island and Wrangell as soon as the Northland purchase is finalized.

Jim Scholz, director of port operations for Samson, said Tuesday that the state facilitated discussions between the companies to ensure continuity and avoid any antitrust violations.

“The state has some antitrust and antimonopoly concerns, and they’ve been actively speaking with us about our seriousness toward entering the market,” Scholz said.

When asked for comment Tuesday, Alaska Assistant Attorney General Cori Mills said the state “cannot confirm or deny … our involvement at this time.”

For Samson, beginning service to Southeast ports outside Sitka would represent a return to the market.

“Samson used to provide lots of service in the region,” said Scholz. “With the demise of the logging industry and the timber industry in Southeast Alaska, Samson was forced to change the way they operate and look at other markets in order to stay in business. And that’s how we ended up in Southwest Alaska.”

Scholz added, “Samson’s very excited about the opportunity to get back into our hometown regional market.”

Northland’s purchase by Lynden and Samson’s entry into the Southeast market would mean that the two major marine freight transportation companies in the region would be family-owned enterprises, Anderson noted.

At present, Northland is part of Portland, Ore.-based private investment firm Endeavour Capital’s portfolio of companies.

“Endeavour is the majority shareholder in Northland, but the transaction’s between the two companies,” explained Stephen Babson, an Endeavour managing director whose portfolio responsibilities include Northland. “We believe Northland is a great company and is kind of an indispensable provider of cargo services to parts of Alaska. We believe that tradition will be continued by Lynden.”

If the sale goes through, Endeavour will no longer be Northland’s majority shareholder.

“So with this happening, it’ll go from a private equity group (majority) ownership to a family-owned Alaska company, meaning Lynden will be purchasing Northland,” said Anderson. “And talking about Samson coming in and filling that void, they’re a family-owned business located in Sitka. So we see it as a great opportunity to have two local companies, basically, two Alaska companies back in serving all of Southeast Alaska.”

As a Lynden company, McKallor said, Northland would likely leave Southeast to AML while continuing to serve areas like Hawaii and western Alaska where Lynden does not currently operate.

“This is a great opportunity for the overall corporation to move into new markets,” Anderson added. “With AML, we basically served Southeast Alaska and Prince William Sound, so we weren’t able to go out there and compete for the seafood industry and those sort of things out at Bristol Bay and in Kodiak and those areas. So we’re very excited about that.”

State and federal officials will need to approve the purchase before the sale can be completed. Anderson said that process will likely take most of the year, predicting that the sale could be final by October or November.

“In the meantime, we will continue to compete with Northland, and until the deal is 100 percent done — that’s just the way that these things work is that you just continue on as competitors,” said Anderson.

Both Anderson and Scholz indicated an interest in bringing on Northland’s Southeast employees, characterizing them as a trained and experienced workforce.

“These people aren’t everywhere, and obviously Northland has a lot of very qualified people up here that between these two companies, Lynden and Samson, we’re going to need them to get the job done,” Anderson said.

Scholz remarked, “My hope is that we can capitalize on their expertise and put some of those people to work for Samson.”

If the deal derails and Lynden fails to acquire Northland, Scholz acknowledged that would hinder Samson’s expansion plans in Southeast Alaska.

“I don’t believe that there’s really room for three major carriers servicing the market,” said Scholz. “Unless we had some pretty strong assurances that customers were going to be supportive of us, we wouldn’t be able to enter the market.”

Contact reporter Mark D. Miller at 523-2279 or at mark.d.miller@juneauempire.com.

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