Acquisition offer pulled for Dorian
A Singapore shipping firm is abandoning its acquisition pursuit of Stamford-based Dorian LPG, citing frustration with an alleged lack of engagement from Dorian.
In the past five months, BW LPG has made several billion-dollar offers for Dorian, which specializes in transporting liquefied petroleum gas. But the deal foundered after both companies’ executives complained about their counterparts’ negotiating tactics.
“Although we continue to believe in the benefits of the proposed merger, and that a combination would be highly beneficial for your shareholders, we are first and foremost committed to acting in the best interests of BW LPG’s shareholders,” BW board Chairman Andreas Sohmen-Pao said Monday in a letter to Dorian’s CEO, president and chairman, John Hadjipateras. “Accordingly, we hereby withdraw our proposal. It is not normal practice nor in the best interest of our shareholders to hold a proposal open indefinitely, especially when it is highly favorable to the counterparty.”
In a responding letter to Sohmen-Pao, Hadjipateras said Dorian officials had weighed BW’s offer with an initial meeting and BW presentation to Dorian’s board and also held a meeting two weeks ago with BW advisers that included extensive Dorian commentary on the proposal.
“To explore the full range of value-creating opportunities available to Dorian LPG, we asked several times if you could improve your proposal and left the door open to further discussion and a response to the issues that we outlined in our latest meeting. Instead, you have refused to consider improving your proposal and, most recently, have withdrawn your proposal.”
BW announced May 29 its plan to combine with Dorian in an all-stock deal worth $1.1 billion to create a company with 73 vessels. On its own, Dorian owns and operates 22 very-large gas carriers, according to its website.
“Combining Dorian’s high-quality fleet and operating platform with BW’s vessels and expertise would create a larger combined fleet with better geographical coverage to drive value for our customers,” BW CEO Martin Ackermann said in a statement after the proposed deal was announced.
Dorian officials announced June 15 their rejection of the initial offer.
“Our board, whose members are beneficial owners of more than 25 percent of our outstanding shares, has unanimously concluded that BW LPG’s proposal undervalues Dorian and is not in the best interests of Dorian and its shareholders,” the company said in the statement.
On July 9, BW made another bid — one that would have given Dorian shareholders 2.12 BW shares for each Dorian share. BW also said it planned to run independent candidates this year for seats on Dorian’s board of directors.
Since BW made its first bid, Dorian’s stock price has stayed relatively consistent. Shares were trading midday Monday around $7.65, compared with a 52-week high of $8.79.
In the past quarter, Dorian’s revenues fell by about one-third from last year, to approximately $28 million, a drop mainly attributable to lower fleet usage and decreased daily revenue averages. The company recorded a loss of about $21 million, compared with a deficit of nearly $7 million in the same period in 2017.
Dorian officials have said they were still optimistic about the firm’s long-term prospects. They cited a recently completed refinancing plan and the company’s preparations for new regulations on shipping sulfur emissions set to be implemented in the next two years.
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