Diana Shipping Drops Bid to Acquire Genco Shipping & Trading
The decision ends a nearly year-long takeover battle between the two shipping companies
- Diana Shipping is dropping its bid to acquire Genco Shipping & Trading, ending a nearly year-long takeover battle.
- Diana Shipping said it withdrew the bid due to demands by Genco that no credible acquiror could realistically meet.
- The demands included $27.50 a share in cash, an additional $2.00 per share for expected dividends, and three shares of Diana Shipping.
Diana Shipping DSX 0.40%increase; up pointing triangle is dropping its bid to acquire Genco Shipping & Trading GNK 1.35%increase; up pointing triangle, ending a nearly year-long takeover battle between the two shipping companies.
Diana said Friday that it withdrew its bid due to demands by Genco that “no credible acquiror could realistically meet and that raises serious and legitimate questions about whether the Genco Board’s interests remain aligned with those of Genco’s shareholders.”
Those demands, Diana said, included a consideration of $27.50 a share in cash, an additional $2.00 per share to reflect Genco’s expected third- and fourth-quarter dividends, and three shares of Diana.
Based on Diana’s Thursday closing price, that request implied a total consideration of around $36.91 for each share of Genco, Diana said. That price represents a 42% premium to Genco’s Thursday closing price and a 57% premium to its closing price the day before Diana submitted its most recent acquisition offer, Diana said.
By adding three shares of Diana for each Genco share, Diana added, Genco shareholders would own around 47% of the combined company after the deal would have closed.
Genco’s request for $27.50 a share in cash is based on “convoluted valuations” of its net asset value, Diana added.
A Genco representative didn’t immediately respond to a request for comment.
Shares of Diana rose 3.2% to $2.56 in after-hours trading on Friday. Genco shares were off 0.7% at $26.16.
Diana first made its approach to acquire Genco in November, proposing a price of $20.60 a share in cash. Since then, it has upped its offer multiple times, and launched both a tender offer for Genco shares and proxy fight to replace its board.
Diana later withdrew all but two of its board nominees, and Genco shareholders voted against those candidates at a shareholder meeting in June, Genco has said. Diana also ended its tender offer last month.
Genco said last month that its advisers were engaging with Diana over its latest acquisition offer, a marked change of tone that suggested a deal could be within reach. Diana’s move to withdraw its acquisition offer ends the possibility of a tie-up between the two companies for now.
Diana said Friday that it remains Genco’s largest shareholder.
“We gave this process every opportunity to succeed, and Genco’s response has left us no choice but to withdraw our proposal at this time,” Diana Chief Executive Semiramis Paliou said Friday. “We will continue to monitor its performance closely, raise these issues publicly, and hold the Genco Board and management team accountable for every commitment made to shareholders throughout this process.”