Genco Shipping and Trading has unanimously rejected a revised, non-binding proposal from Diana Shipping to acquire all outstanding shares for $23.50 per share in cash. The board of directors determined the offer substantially undervalues the company and fails to provide an appropriate premium to shareholders.
A special committee of independent directors reviewed the bid with financial and legal advisors before recommending the rejection. Genco stated the proposal presents execution risks and fails to recognise its intrinsic value in a strengthening drybulk market.
The company noted that Diana Shipping selectively used the lowest published net asset value estimate of $24 per share rather than the mean analyst estimate of $25 per share.
In a letter to Diana Shipping, Genco said the offer lacks an appropriate premium to its net asset value.
Concerns were raised regarding a disclosed agreement with Star Bulk to sell 16 vessels at valuations fourteen per cent below average broker estimates. Genco called this a "fire sale" that deprives shareholders of full value.
Specific sales included the 2020-built Newcastlemax Genco Valkyrie for $66 million, which is 12 per cent below the broker valuation of $75 million. Other vessels included the Genco Constantine for $24 million and the Genco Enterprise for $19 million.
Genco also noted that Diana Shipping claimed to have $1.433 billion in fully committed financing but publicly filed letters only specified $1.102 billion. The board said it remains open to engaging on a transaction that appropriately reflects its fleet quality and upside potential.
Genco previously offered to acquire Diana Shipping in January this year.