Genco Rejects Third Offer from Diana Two Weeks Before Shareholder Meeting
The takeover battle that has been going back and forth for six months continues to build with Genco Shipping & Trading releasing a statement from its board rejecting Diana Shipping’s third, increased offer. It comes just two weeks before the pivotal shareholder meeting for Genco that could decide the outcome of the battle.
Diana’s Chief Executive Officer, Semiramis Paliou, increased his rhetoric in a statement shortly after Genco went public with its rejection of the offer. Paliou says it has become evident that, despite what it says, Genco’s board has no intention of engaging in meaningful negotiations. He says Diana has attempted to initiate negotiations for six months since it went public with its offer and twice raised the value of its cash offer to the shareholders. Diana remains the largest shareholder of Genco, having purchased nearly 15 percent in open market transactions last year.
Genco’s board asserts it has engaged with Diana for two years, beginning in June 2024, when it says its CEO proactively reached out to Diana to explore a potential business combination. Genco is the past has asserted that it has a stronger balance sheet and should be leading the discussions.
After Diana raised its offer to $24.80 per share in late May and extended the expiration date on the tender, Genco says its board engaged with investment bankers from both Jefferies and Morgan Stanley. Based on that review, it again unanimously rejected the revised unsolicited tender offer.
The board calls the offer “inadequate from a financial point of view,” and says it “continues to meaningfully undervalue the company.” Genco cites calculations based on the net asset value estimates from investment firms SEB, Clarkson Securities, Fearnley Securities, Deutsche Bank, and Pareto to assert the mean analyst estimate is $26.66 for NAV and a current median estimate of $27.10. It also asserts that Diana has not been willing to offer shareholders a premium for the change in control.
In some of its strongest language, Diana now accuses Genco’s board of “moving the goal posts on valuation,” asserting the company, which has cited the valuation from the independent VesselsValue for years, abandoned them for the analyst estimates.
“Beyond the question of which valuation source is most appropriate, Genco is demanding a premium on top of those inflated estimates when shares of drybulk companies, including Genco itself, have consistently traded at a meaningful discount to NAV. Shipping take-private transactions have on average been concluded at a 20 percent discount to NAV — not at a premium. Applying a control premium on top of an already inflated NAV estimate is a framework designed to make any offer appear inadequate, not to achieve a fair result for shareholders,” asserts Diana.
that matters most
Get the latest maritime news delivered to your inbox daily.
Genco reiterates in its statement its willingness to meet again with Diana “if and when they submit an offer that adequately compensates shareholders.”
The shareholder meeting scheduled for June 18 is the next test with Diana advocating for its slate of replacement directors. Analysts believe it is too early to determine which way the investors will vote and the likely outcome of the meeting. It rates as one of the longest-running and most hotly contested takeover battles the industry has seen.