Diana renews Genco takeover bid with higher offer and Star Bulk backing

Following the Genco board’s unanimous rejection of Diana’s initial offer of US$20.60 per share, the Greek owner has now raised its bid to US$23.50 per share. The revised proposal applies to all issued and outstanding Genco shares not already owned by Diana, which currently holds a 14.8% stake in the company.

The latest move also includes backing from dry bulk giant Star Bulk. The company has entered into a definitive agreement with Diana to acquire 16 Genco vessels, subject to Diana’s successful completion of the Genco acquisition.

The aggregate purchase price for the vessels is estimated at US$471M in cash. The fleet includes one Newcastlemax, six Capesize, seven Ultramax and two Supramax vessels, with a combined capacity of approximately 1.8M dwt and an average age of 11.4 years.

Star Bulk intends to fund the purchase with a combination of existing cash resources, partly reserved from prior vessel sales, and new debt financing.

“As a leading public company in the dry bulk space, we firmly believe consolidation in our sector creates value for all shareholders,” said Star Bulk chief executive Petros Pappas. He added that he is pleased to support Diana’s proposed acquisition, noting that the transaction would allow Star Bulk to increase scale, earnings and dividends.

“We are pleased that Star Bulk – a leader in the dry bulk sector – is supportive of our efforts to acquire Genco,” said Diana Shipping chief executive Semiramis Paliou.

Genco weighs proposal

Genco said on 6 March that its board will review the offer with the assistance of external advisers. The US-based owner stated that it “will take the actions it believes are in the best interests of the company and all Genco shareholders.”

“Our board and management team will continue to do what is in the best interests of all Genco shareholders,” the company added, noting that it does not intend to comment further until the review process is completed. Shareholders do not need to take any action at this time.

Jefferies LLC is acting as financial adviser to Genco, while Herbert Smith Freehills Kramer (US) LLP and Sidley Austin LLP are serving as legal counsel.

Financing backing

Diana will also combine the increased offer and Star Bulk’s support with approximately US$1.4Bn in fully committed financing arranged by DNB Carnegie and Nordea, with participation from several leading international banks.

According to Diana, the increased offer represents a 31.0% premium to Genco’s closing share price on 21 November, just before the initial proposal was made. The company also noted that the offer implies dividend yields of 9.1% and 8.3% based on analysts’ consensus estimates for dividends per share in 2026 and 2027, respectively, as well as a price-to-net asset value ratio of 1.0x based on NAV estimates from Clarksons Securities.

Call for negotiations

Following the increased offer, Ms Paliou urged Genco’s board to “immediately come to the table and engage in good faith negotiations regarding this highly compelling opportunity to deliver certain, premium value to its shareholders.”

Diana said that since announcing its initial proposal, Genco’s board has refused to engage constructively. As a result, the Greek owner has nominated a slate of independent director candidates for election at Genco’s upcoming annual meeting.

The US-based company has previously pushed back against Diana’s efforts, stating that the Greek owner is attempting to acquire “Genco at a significant discount to its NAV and without an appropriate premium in exchange for control.”

Diana Shipping currently operates a fleet of 36 bulk carriers with a combined capacity of around 4.1M dwt, while Genco operates 45 vessels totalling approximately 5.0M dwt.

Star Bulk owns 141 bulk carriers with an aggregate capacity of 14.0M dwt.