Diana Vows Proxy Fight After Genco Again Rejects Merger Proposal
The takeover battle designed to consolidate the dry bulk shipping with the merger of Diana Shipping and Genco Shipping & Trading continues as both sides appear entrenched in their position. Genco’s board has twice rejected proposals from Diana, with the battle appearing to be headed to the shareholders after Diana put forward an alternate slate of directors for Genco.
“Rather than constructively engage with Diana regarding our premium proposal, the Genco Board has for the second time dismissed it without seeking any clarification,” wrote Diana in its latest salvo in the takeover fight. The company asserts that combining the two companies is ideal based on the start of a strong cycle in the sector.
Diana had increased its proposed price per share and reported that it had secured financing. It also said that it had an agreement with Star Bulk to sell 16 of Genco’s vessels after completing the combination. For its part, Genco’s board has reputedly said the proposals are “well below Genco’s intrinsic value and NAV and fail to provide a premium for control of Genco.” The board says it unanimously agreed the proposals are not in the best interest of Genco shareholders.
Rumors of a takeover began last year when Diana began buying shares of Genco. It accumulated approximately 14.8 percent and then, in November, went public with its proposals. It increased the offer in March but says Genco has not engaged in discussions.
Further, Daiana asserts that the board “continued to raise unfounded questions about its financing.” Early on, Genco also said that it had a stronger balance sheet and that maybe it should be buying Diana. Now, Diana asserts the board is making comments that are “simply false and appear intended to divert attention.” Genco, in its response this week, called the proposed sale of vessels a “fire sale” and raised doubts about Diana’s reported $1.433 billion fully committed financing.
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“Genco’s actions lead us to conclude that this board and management team are more focused on entrenching themselves than maximizing value for their shareholders. We, therefore, have no choice but to proceed with our effort to elect to the Genco board independent directors who will act in the best interest of all shareholders by exploring all meaningful opportunities for value creation,” said Diana.
The Genco board says it “remains open to engaging with Diana upon receipt of an offer that appropriately reflects Genco’s intrinsic value and upside potential.”
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