Diana Shipping Says Genco Rejected Acquisition Offer Without Engagement
Diana, which owns a roughly 14.8% stake in Genco, had offered to buy the company for $20.60 a share in cash
- Diana Shipping’s $20.60 per share cash offer for Genco Shipping & Trading, a 15% premium, was rejected by Genco’s board.
- Genco’s board cited the offer as significantly below its net asset value and the stock’s 10-year high of $26.93.
- Genco proposed acquiring Diana, while Diana views this as a tactic to dismiss its acquisition offer.
Diana Shipping DSX -0.54%decrease; red down pointing triangle said its offer to acquire Genco Shipping & Trading GNK 1.17%increase; green up pointing triangle was rejected by Genco’s board without engaging with the bidder.
Diana, which owns a roughly 14.8% stake in Genco, had offered on Nov. 24 to buy the company for $20.60 a share in cash, representing a 15% premium to Genco’s closing price on Nov. 21.
The offer “was flatly rejected by the Genco Board without any engagement with Diana,” the company said Tuesday. “Despite taking more than six weeks to respond to Diana’s attractive offer, the Board refused to enter into any discussions, raise any specific questions or seek any clarification with Diana on the proposal.”
Genco confirmed the board’s rejection, saying Diana’s indicative proposal was significantly lower than Genco’s net asset value. It added that the purchase price was well below the stock’s 10-year high of $26.93.
Genco said its board believes there are significant execution risks, including Diana’s balance sheet and its high leverage profile, as well as the absence of committed financing.
“Given the substantial borrowing and leverage required to complete the transaction, our board sees significant uncertainty in Diana’s proposal or any similar proposal,” Genco said.
Diana’s bid is backed by up to $1.1 billion in financing from DNB Bank and Nordea Bank.
In response to the offer, Genco suggested that it might acquire Diana, but didn’t provide any financial details for a potential bid, including a price or premium, Diana said.
Genco said it had sought to engage with Diana, both directly and through advisers, to explore an alternative transaction under which Genco would acquire Diana.
“Our board believes its proposed transaction structure could create value for Diana and Genco shareholders,” Genco said.
Diana said Genco’s counteroffer showed that the company recognized “the benefits of dry bulk industry consolidation,” but said it was “merely a tactic that serves no purpose other than to dismiss and detract from Diana’s attractive offer.”
Diana Chief Executive Officer Semiramis Paliou said the company was disappointed by Genco’s response but said Diana would welcome a dialogue about the acquisition offer.
Diana said its board was considering all options to advance its offer.