Genco rejects Diana’s revised bid as undervaluing the company, open to talks

Semiramis Paliou-led Diana raised its offer to US$23.50 per share, following an initial bid of US$20.60, while also securing backing from Petros Pappas’ Star Bulk Carriers under a preliminary sale and purchase agreement.

Genco disclosed on 19 March that its board had unanimously rejected Diana’s revised proposal. Based on the recommendation of a special committee, the board “determined that the proposal substantially undervalues Genco, fails to provide an appropriate premium to Genco shareholders and presents execution risks.”

However, the company emphasised that its board remains open to engaging with Diana upon receipt of an offer that “appropriately reflects Genco’s intrinsic value and upside potential in a strengthening market.”

Explaining the reasons for its second rejection, Genco said that “Diana’s letter selectively referenced the lowest published NAV estimate from one analyst, rather than Genco’s mean analyst NAV estimate of US$25.00. This suggests the average analyst NAV is well above Diana’s offer of US$23.50 during a period of rising asset values.”

Citing “execution risk”, the company added that Diana had announced US$1.4Bn of fully committed financing, “but filed a commitment letter that specifies only US$1.1Bn in commitments.”

Regarding the agreement between Diana Shipping and Star Bulk Carriers for the sale of 16 Genco bulk carriers – subject to the completion of the acquisition – the company said the pricing further demonstrates that the offer undervalues Genco.

“Under that agreement, the vessels would be sold to Star Bulk at a valuation 14% below the average broker valuation,” Genco said.

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.