Diana Shipping announces cash bid to take over Genco
Diana offers $20.60 per share to acquire the remaining 85.2% of Genco
The US-listed dry bulk space has seen two big M&A deals in the past two years: Star Bulk’s merger with Eagle Bulk and CMB.Tech’s acquisition of Golden Ocean. Now, Diana Shipping is seeking to buy Genco
AFTER circling for months, Greece’s Diana Shipping announced a proposal for a full takeover of Genco Shipping & Trading on Monday, offering to pay $20.60 per share in cash.
The offer values New York-based Genco at $891m, based on 43.2m outstanding shares. Diana owns 6.4m shares or 14.8% of Genco, meaning that it would pay $759m for the shares it doesn’t currently own.
“We intend to finance the transaction through a new acquisition facility and will plan to selectively divest assets following a potential transaction in order to optimise our fleet and balance sheet,” said Diana chief executive officer Semiramis Paliou.
Diana has engaged DNB and Nordea to lead a $1.1bn syndicated loan facility to pay for the shares and refinance Genco’s existing debt.
Diana said that offer is at a 15% premium to Genco’s close on Friday; a 21% premium to the closing price on July 17, the day Diana’s initial 7.7% stake was disclosed; and a 23% premium to Genco’s 30-day and 90-day trading average.
Paliou said the offer would allow Genco’s shareholders “to realise immediate cash value for their shares at a premium to historical trading of the company”.
“We highly value the talent and contributions of Genco employees. We expect the combined company to select the best talent, drawing employees from both organisations.”
Genco’s shares are trading below net asset value, as is the case across the dry bulk space. The Diana offer is roughly in line with Genco’s NAV, 1% below the estimates of two analysts.
Clarksons Securities estimates that Genco’s NAV is $20.80 per share. Genco’s share price on Friday was 86% of NAV, according to Clarksons, in line with the overall NAV discount of the dry bulk segment.
Jefferies puts Genco’s NAV at $22.90 per share.
When CMB.Tech purchased John Fredriksen’s stake in Golden Ocean in March, it paid a 14% premium to Golden Ocean’s NAV, based on Clarkson’s NAV calculations.
Following its initial purchase of Genco shares in early July, Diana increased its holdings to 9.9% on July 31 and to 14.9% on September 30.
Genco announced a one-year poison-pill shareholder rights programme on October 1, effective if any entity owned 15%, just above Diana’s stake.
It amended the poison pill on November 10, lowering the bar to 10% for an active investor excluding Diana, after Genco concluded that Diana “could seek to transfer its position in whole or in part”.
