2888
Views

After Several Proposals, OSG Finally Agrees to Buyout by Saltchuk

OSG tanker
OSG agreed to be acquired by Saltchuk (OSG file photo)

Published May 20, 2024 5:34 PM by The Maritime Executive

 

Tanker and ATB operator Overseas Shipholding Group (OSG), which is focused on the U.S. Jones Act tanker business, has agreed to be acquired by the private-owned Saltchuk Resources, which continues to build a diversified holding in marine and freight transport. The agreement comes nearly five months after Saltchuk made an unsolicited indication of interest in January 2024 and is the latest in a series of approaches that the investor made in attempting to acquire OSG.

“We are pleased to have reached an agreement that reflects our leading Jones Act business, longstanding customer relationships, and the value created by the OSG team over the past several years,” said Douglas D. Wheat, Chairman of the OSG Board of Directors.

Under the agreed terms, Saltchuk will launch a tender for the shares it does not already own in a transaction valued at $950 million. Saltchuk in an SEC filing recently reported it already holds just over 20 percent of the stock. The agreed price of $8.50 per share, is a 61 percent premium to the stock price in January and is also an increase of the indication of $6.25 per share when they announced the latest offer this year. Saltchuk previously sought to buy OSG in 2021 with an offer of $3.00 per share or a deal then valued at $260 million.

Dating to the 1940s, OSG has been involved with shipping oil from Alaska and other shuttle tankers and barges since the 1960s. The company is focused on the U.S. flag markets operating under the Jones Act after having spun off its international tankers after it went bankrupt in 2012. It emerged from bankruptcy in 2017.

The company’s board said it conducted a review of its financial and strategic alternatives, including remaining public, as well as approaching and engaging with other potential suitors after receiving Saltchuk’s proposal in January. The board concluded that Saltchuk’s increased offer represented a compelling value and was in the best interest of shareholders.

OSG announced last year that it was investing its Alaskan crude oil transport business by purchasing and reactivating a tanker as well as upgrading the engines on its three existing Alaska tankers. They said they expected Alaskan oil output to continue to increase. Recently, the company was also awarded a $3 million federal grant for the engineering and design of a new vessel that will transport liquified carbon dioxide (LCO2).

Saltchuk is a holding company controlled by the Engle family and is the largest family-owned business in Washington State. Among its maritime interests are ownership of TOTE, Tropical Shipping, Foss Maritime, and towing company Young Brothers.

Under the agreement with OSG, the company will become a standalone business unit within Saltchuk. They reported that Saltchuk has cash on hand and committed debt financing for the transaction, which is expected to close in the next few months.