Star Bulk Carriers Corp. and Eagle Bulk Shipping Inc. have entered into a definitive agreement to combine in an all-stock merger on a Net Asset Value to Net Asset Value (NAV) basis with a pro forma market capitalization of approximately $2.1 billion, reports Globe NewsWire.
All-stock merger
Under the terms of the agreement, which was unanimously approved by the boards of directors of both companies, Eagle shareholders will receive 2.6211 shares of Star Bulk common stock for each share of Eagle common stock owned. This represents a total consideration of approximately $52.60 per share, a 17% premium based on Eagle’s closing share price of $44.85 on December 8, 2023. Upon the close of the transaction, Star Bulk and Eagle shareholders will own approximately 71% and 29% of the combined company on a fully diluted basis, respectively.
“Bringing together Star Bulk and Eagle will create a global leader in dry bulk shipping with a large, diversified, scrubber fitted fleet. Together we will benefit from greater scale with 169 owned vessels, generating meaningful synergies and building an even stronger financial profile,” Petros Pappas, Chief Executive Officer of Star Bulk, commented.
Gary Vogel, Eagle Chief Executive Officer, said, “We are very excited to be joining forces with Star Bulk, uniting two best-in-class companies, both commercially and operationally. We are bringing together two highly complementary organizations and are confident that this accretive merger with Star Bulk will unlock significant value for Eagle shareholders, including the opportunity to participate in the long-term upside of the combined company.”
Strategic and Financial Benefits
- A Leading, Diversified Fleet of Scrubber-Fitted Vessels with Greater Scale. The combined company will be the largest U.S. listed dry bulk shipping company with a combined fleet of 169 owned-vessels on a fully delivered basis, 97% of which are fitted with Exhaust Gas Cleaning Systems (“scrubbers”), ranging from Newcastlemax/Capesize to Supramax/Ultramax vessels and a global market presence.
- Best-in-Class Technology-Driven Operations and Management. Both companies employ fully integrated ship management operations across commercial and technical management, and Star Bulk will leverage Eagle’s expertise in the Supramax/Ultramax sector to improve upon utilization and performance.
- Strong Financial Profile and Capital Return Framework: The combined company is expected to have combined liquidity2 of nearly $420 million, as of September 30, 2023, and net leverage of approximately 37%3. Both companies expect to maintain their respective dividend policies until the transaction is completed. Following close, the combined company expects to maintain Star Bulk’s current dividend policy.
- Significant Cost and Revenue Synergies. The transaction is expected to generate at least $50 million in annual cost and revenue synergies within 12-18 months following close through commercial operations integration and economies of scale, including reductions in general and administrative expenses.
- More Attractive Investment Proposition: The combined company will have significantly increased pro forma market capitalization and expected trading liquidity in the dry bulk sector. With increased size and liquidity, the combined company expects to reduce its cost of capital.
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Source: Globe NewsWire
