Teekay Shipping and Torm Agree to Buy OMI Corporation and Split its Assets
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U.S.-listed Teekay Shipping and Danish transport giant DS Torm have announced that they have signed an agreement to acquire American shipping company OMI for $2.2 billion. The agreement was unanimously approved by OMI's Board of Directors and the takeover will likely be completed over the coming months. Under the terms of the deal Torm and Teekay will be equal partners: Teekay will get OMI's crude vessel operations and eight product tankers, while TORM will acquire all of the remaining 26 product tankers.
The offer is subject to the usual regulatory approvals and acceptance from OMI shareholders. The transaction, expected to clear those hurdles, is anticipated to close during the second quarter of 2007. Both Teekay and Torm continue to improve their market share by bolstering existing strengths. Torm will get well-maintained and modern additions to its product tanker fleet, as well as ensure its presence in the American sector of the market. Teekay, which already owns and operates one of the world's largest fleets of crude oil tankers, will get OMI’s established Suezmax operations.
The purchase price equates to about $29.25 per share, in excess of the previously accepted $25 - $26 valuation of OMI. Some analysts had previously thought that the generally accepted valuation of $25 to $26 for OMI was too high a price to pay. But, Dahlamn Rose’s market analyst Omar Nokta told MarEx on Wednesday, “You pay for quality. Teekay in particular is not aggressive, they are a conservative company and they take their time. I see this as a big positive for the market. Both Teekay and Torm have made a big commitment in their respective strengths and they are betting that the strong market will continue.” The deal was Teekay’s second big announcement in the past eight months -- coming directly on the heels of its acquisition of Petrojarl ASA’s FPSO’s assets.