Star Bulk and Eagle Bulk Merge, Creating Dry Bulk Leader

Two publicly-listed bulker companies have announced plans to join forces in a merger that will create a market-leading firm with a market cap of more than $2 billion. 

Star Bulk Carriers and Eagle Bulk Shipping announced Monday that they have agreed to enter into an all-stock merger. Under the terms, Eagle Bulk shareholders will receive about 2.6 shares of Star Bulk for each of their Eagle Bulk common stock share. The deal values Eagle Bulk at more than $52 a share, giving its stockholders a 17 percent premium over the closing price on Friday. 

The merger will leave Star Bulk shareholders with a 71 percent stake in the combined company, with Eagle Bulk shareholders owning the rest. The merged firm should have a strong balance sheet with $420 million in cash and low leverage. 

The newly-enlarged Star Bulk will have a fleet of 169 vessels, ranging in size from Ultramax to Capesize, almost all fitted with scrubbers. It will be the largest dry bulk company publicly listed on U.S. markets.  

With scale comes a measure of efficiency, and the combined firm expects to save about $50 million a year in overhead, in part by cutting administrative expenses. It also expects that its size and liquidity will help it to reduce its cost of borrowing. 

Petros Pappas, CEO of Star Bulk, will lead the combined firm from offices in Athens. The "Star Bulk" name will be retained. 

"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," said Eagle Bulk CEO Gary Vogel in a statement.