Paliou’s Diana Shipping launches premium takeover bid for Genco

The US-listed Greek owner disclosed on 24 November that it has submitted a letter to Genco’s board proposing to acquire all outstanding shares of the company not already owned by Diana for US$20.60 per share in cash. Diana currently holds approximately 14.8% of Genco’s outstanding shares.

US-listed and US-based Genco responded that its board will carefully review and evaluate the proposal to “determine the course of action that it believes is in the best interests of the company and all Genco shareholders.” The company added that its shareholders do not need to take any action at this time.

This development follows Diana’s earlier entry into Genco’s shareholder base, after which Genco adopted a ’poison pill’ – a shareholder rights plan intended to reduce the likelihood of any entity gaining control or significant influence through open-market accumulation or other tactics that could disadvantage shareholders without paying an appropriate control premium.

Premium offer

The latest offer from Diana appears to carry a meaningful premium. The company said the proposed price of US$20.60 per share represents a 15% premium to Genco’s closing share price on 21 November, a 21% premium to the closing price on 17 July when Diana’s ownership stake was first disclosed, and a 23% premium to the volume-weighted average price for both the 30-day and 90-day periods ending 21 November. Diana added that the offer is broadly in line with Genco’s 10-year high share price.

Diana chief executive Semiramis Paliou said the proposal offers “a compelling opportunity for Genco’s shareholders to realise immediate cash value for their shares at a premium to historical trading of the company.” She expressed confidence that combining Genco’s fleet with Diana’s operating platform would increase scale and fleet flexibility while enhancing operating leverage to the dry bulk market “at what we consider to be an opportune time in the cycle.”

“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,” Ms Paliou added.

Financing the offer

Diana intends to finance the acquisition through a new facility and plans to selectively divest assets following a potential transaction to optimise its fleet and balance sheet.

In an SEC filing, the company disclosed that it has engaged DNB Bank and Nordea to lead the financing effort and is confident in its ability to secure US$1.1Bn in debt financing to fund the purchase price, refinance Genco’s existing debt, and cover transaction costs.

Fleet compositions

Diana currently owns 36 bulk carriers with a combined carrying capacity of 4.1M dwt and a weighted average age of 11.99 years.

Genco’s fleet consists of 45 vessels with an average age of 12.5 years and a total capacity of approximately 5.0M dwt. The company has also recently agreed to acquire two modern Newcastlemax bulk carriers.