Genco Shipping & Trading has rejected Diana Shipping’s revised takeover proposal, dismissing the offer as inadequate and arguing that it significantly undervalues the company.
The latest approach offered $23.50 per share for all outstanding Genco stock, valuing the deal at around $860 million. It followed an earlier offer of $20.60 per share that Genco also rejected in January. After reviewing the revised bid, Genco’s board—acting on the recommendation of a special committee of independent directors supported by legal and financial advisers—again declined to move forward.
In its statement, Genco said the proposal fails to provide an appropriate premium for shareholders and also carries execution risks. The company added that the offer does not reflect Genco’s intrinsic worth, especially considering what it described as its stronger returns, premium-earning assets, spot-focused commercial strategy, operating leverage and commercial platform in what it sees as a strengthening dry bulk market.
Diana Shipping had said the bid was backed by potential financing of $1.43 billion arranged by DNB Carnegie, Nordea and other international banks. The proposed transaction also included support from Star Bulk, which agreed to acquire 16 Genco vessels from Diana for $470.5 million if the takeover were completed.
Star Bulk president Hamish Norton had publicly described the Diana bid as compelling and suggested the Genco board should seriously consider it. He also said shareholders might eventually choose to support a Diana-backed slate of directors if they felt Genco was not engaging in good faith.
Genco, however, strongly pushed back. The company said the proposal failed to provide an appropriate premium to net asset value and accused Diana of selectively citing the lowest analyst NAV estimate instead of the mean analyst NAV of $25.1 per share.
It also sharply criticised the planned onward sale of 16 vessels to Star Bulk, describing the transaction as effectively a fire sale that would deprive Genco shareholders of value. In a letter addressed to Diana’s leadership, Genco chairman and chief executive John C. Wobensmith and lead independent director Kathleen C. Haines said several of the agreed vessel prices were materially below broker valuations.
Among the examples cited, Genco said the 2020-built Newcastlemax Genco Valkyrie had been priced at $66 million, which it said was 12% below average broker valuation. It also said Genco Constantine was valued at $24 million, or 17% below average broker estimates, while Genco Enterprise was priced at $19 million, around 24% below average valuation.
Despite rejecting the bid, Genco said it remains open to discussions with Diana if a future offer appropriately reflects the company’s value and upside in a market that management believes is improving.
