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The now long-running takeover battle designed to reshape the dry bulk segment took a new turn as Diana Shipping announced it has opened a tender offer for the shareholders of Genco Shipping. It is the latest step in the five-month battle that shows no signs of being resolved.
Diana launched the offer to acquire the shares of Genco that it does not already own, and later increased the valuation after questions were raised about its ability to finance the combination. The two companies are similar in size, and combined, they would create a powerhouse in the segment with as many as 80 or more ships. Both companies agree it is an opportune time in dry bulk shipping, but there have been no direct talks about the valuation for the merger.
"We have spent five months seeking to engage with the Genco Board on a transaction that would deliver certain, premium value to Genco shareholders at cyclically high asset values. The Genco Board has refused every attempt — not a single meeting, not a single phone call — and has not responded to the merger agreement we delivered. We are now taking our offer directly to the people it is designed to benefit: Genco shareholders," said Semiramis Paliou, Diana's Chief Executive Officer.
The tender offers the same price as proposed in March to the Genco board. Diana would pay $23.50 per share in cash. In the revised offer, it detailed secured financing and said it also had an agreed deal to sell 16 Genco vessels to Star Bulk Carriers for $470.5 million upon the closing of the combination with Genco.
Genco's board has repeatedly said, and renewed its position today, that the offer is "inadequate." It notes the price is unchanged and that it had previously rejected the second offer as still not reflecting the value of the company. After reviewing both offerings, the board unanimously rejected them. At one point, it suggested it had a stronger balance sheet, and it should be buying Diana.
"Genco's mean sell-side analyst NAV estimate is currently $25.80, and the median estimate is $26.50 in a period of rising asset values across the industry," asserts the board. Diana rejects that sayingthe offer is a 31 percent premium to the share price and approximately 1.0x NAV, based on the fleet values that Genco reports.
It is the latest in a series of tactics Diana has tried to push the deal forward. After it was rejected by Genco, which already purchased approximately 14.8 percent of Genco's shares in the open market, it announced it was proposing a new board of directors. It has filed the opposition slate to be presented at the annual meeting. Genco, so far, has not finalized a date for the shareholders' meeting.
The tender is set to run until June 2. Genco's board told shareholders not to act and that it would review the offer and make a formal response within 10 days.
Fuente: The Maritime Executive
