Diana calls Genco’s counter proposals ‘completely disconnected from reality’ in what Genco calls a ‘misleading characterisation’
After months of accusing Genco Shipping & Trading of not engaging in negotiations on Diana Shipping’s unsolicited offer to acquire all outstanding Genco shares that it doesn’t already own, Diana has pulled its offer from the table after Genco put forward a counter offer.
Both sides fired their final salvos for this stretch of the prolonged takeover battle, although Diana warned that as Genco’s largest shareholder, it is “not going away”.
On 14 August, Diana withdrew its offer of $24.80 cash per share plus one Diana share valued at $2.54; the offer included downward adjustments for Genco dividends since the offer was made.Diana shipping said its attempt to negotiate began with its advisors proposing a transaction at $27.50 per share in cash plus three Diana shares, which Genco valued at $1.00 per share. The proposal also stipulated that no adjustments would be made for dividends so that Genco shareholders were not punished for the transaction taking place.
Genco also accused Diana of “misleadingly inflating” the value of its proposed framework after Diana said Genco’s demands were “completely disconnected from the reality of what a credible buyer could reasonably be expected to pay.”
In a press release on 14 August, Diana said the Genco “demands” totalled around $36.91 per share, claiming that was a 57% premium to Genco’s “undisturbed share price” when Diana’s last offer was made.
The misalignment of the two sides’ valuations hinge on differing assessments of Genco’s Net Asset Value (NAV), the value of shares in the combined Diana entity to Genco shareholders, and how dividends are treated in the deal:
Genco Net Asset Value (NAV) – Genco puts its own NAV at $27.50, which it says is based on independent third-party broker valuations and the median of five sell-side analyst estimates.
Diana has Genco’s NAV at approximately $25.00 per share using asset values from VesselsValue, a method it alleges Genco itself used for five years prior to Diana’s acquisition offer being made. It also argued that Genco’s figure failed to account for the costs of selling its fleet, liquidating the company, and severance expenditures under a recently-adopted retention plan.