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Originally published December 23, 2010 at 7:06 AM | Page modified December 24, 2010 at 9:09 AM

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Todd Shipyards agrees to be acquired by Portland firm

Seattle-based Todd Shipyards agreed to be acquired by Vigor Industrial for about $130 million.

Seattle Times business reporter

Shipyards combined

Todd

Headquarters: Seattle

Founded: 1916

Employees: Nearly 1,000

Business: Builds, repairs and maintains ships at yards and related facilities in Seattle, Everett and Bremerton.

Vigor Industrial

Headquarters: Portland

Founded: 1987 (predecessor)

Employees: About 750

Business: Holding company for firms that repair and maintain ships, build barges, operate 60-acre industrial park and provide industrial coatings. Facilities in Portland, Puget Sound and California.

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Todd Shipyards, a fixture on the Seattle waterfront for nearly a century, probably will have a new owner in a few weeks.

The company has agreed to be acquired by Portland-based Vigor Industrial for about $130 million in cash, the firms said Thursday.

Executives with Todd and Vigor said no changes in daily operations are expected at Todd's Puget Sound sites if Todd shareholders approve the sale. Employment levels should not be affected, they added.

"Our intention is to keep that yard running and doing what it's doing," said Alan Sprott, Vigor's vice president.

Todd employs nearly 1,000 at its Harbor Island shipyard and facilities in Everett and Bremerton. Its management and contracts will remain in place, the companies said.

Vigor subsidiaries in Portland, Ore., build barges and operate the West Coast's largest ship-repair yard. The company also does repair work at sites in Puget Sound and California.

"In some respects you're taking the premier shipyard operations of Washington and Oregon and putting them together," Todd CEO Steve Welch said Thursday.

If the sale goes through, publicly traded Todd would be absorbed by privately held Vigor. Going private should help Todd, Welch said.

Its business hinges on bidding successfully for contracts, he said, "and it's more difficult when your competitors can read all about you" in public filings.

Todd's profits also tend to fluctuate dramatically because of changes in work flow, Welch said, and that can be problematic for a publicly traded company.

Welch said he met with workers Thursday to explain the tentative sale. Unions that represent Todd workers could not be reached for comment.

Vigor agreed to pay $22.27 a share for Todd, a 6 percent premium over the stock's closing price on Wednesday, before the deal was announced.

That gap all but disappeared Thursday. Todd shares closed at $22.22, up 5.8 percent, in heavy trading.

While most shipyards specialize in either government or private work, Todd does both, said Peter Philips, publisher of Pacific Maritime Magazine, an industry publication in Seattle.

That has helped make it one of the most successful shipyards in the country, he added: "Todd is a gem. This is not a story of a company falling on hard times."

Todd's long-term contracts may have helped attract Vigor's attention, Phillips said. In 2009 the company's contract to repair aircraft carriers stationed in Puget Sound was extended by the Navy for five more years.

Also in 2009, Washington State Ferries awarded Todd a contract to build two 64-car ferries. Another ferry, built under a previous contract, was delivered this fall.

Todd's most-recent quarterly report says it has a $100 million backlog of repair, overhaul and new-construction work. Before Thursday, its share price had climbed 39 percent so far this quarter.

Welch and Vigor's Sprott said combining the companies' assets and abilities should allow them to compete more effectively with shipyards outside the Northwest. "We won't be cannibalizing each other's work," Sprott said.

It also will create efficiencies, both executives said: When one shipyard has too much work, it could be shifted to another.

Todd was founded in 1916 by William Todd, a Brooklyn boilermaker, who bought a shipyard in Seattle and two in New York. It expanded rapidly, opening yards on the East, Gulf and West coasts. During World War II it employed 57,000 workers.

But business plunged in the 1980s, and Todd was forced into bankruptcy. When it emerged, the Seattle shipyard was the only one left.

Vigor is no stranger to Puget Sound. One subsidiary runs a repair yard in Port Angeles. Another has facilities in Everett and Bremerton, and earlier this year acquired a yard in Tacoma.

Vigor has done subcontract work for Todd, Welch said.

The companies said Vigor has secured financing to buy all outstanding shares and refinance Todd's debt. The sale is expected to close early next year, they said.

Two-thirds of Todd's shares have to be tendered for the offer to go through, and the 15 percent stake owned by Todd management and certain other shareholders is already committed to the deal. The companies' agreement allows Todd to solicit better offers through Jan. 28.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com

Material from Seattle Times' archives is included in this report.

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