Tanker Mega Merger: NYSE-Listed International Seaways and Diamond S. Shipping to Combine
New York-listed tanker companies International Seaways, Inc. (NYSE: INSW) and Diamond S Shipping Inc. (NYSE: DSSI) have announced an all-stock merger that will create the world’s second largest US-listed tanker company by ship count.
Under a definitive merger agreement which was unanimously approved by both Boards of both companies, INSW will merge with Diamond S in a stock-for-stock transaction in which INSW and Diamond S shareholders will own approximately 55.75% and 44.25% of the combined company, respectively.
The combined company will have 100 vessels, shipping revenues of over $1 billion, over 2,200 employees, and an enterprise value of approximately $2 billion, according to a press release announcing the merger. By carrying capacity, the combination will control 11.31 million dwt (the third-largest by dwt) with “significant footprints” in the VLCC, Suezmax, LR1/Panamax and MR markets. The total stock consideration in the transaction has a value of approximately $416 million.
Following the merger, INSW will remain listed on the NYSE under the symbol “INSW”.
International Seaways’ CEO Lois Zabrocky will remain on as CEO, along with Douglas Wheat, INSW’s Chairman of the Board, and Jeffrey Pribor, Chief Financial Officer of INSW. The CEO of Diamond S, Craig Stevenson Jr., will join the Board of Directors of INSW, and also act as a special advisor to the CEO for a 6-month period.
“The merger of Diamond S with INSW unites two companies with long-term customer relationships, similar cultures, and complementary positions in key tanker sectors. The merger will enhance INSW’s capabilities in both the crude and product markets and create ‘power alleys’ for INSW in the large crude -VLCC and Suezmax– and LR1/Panamax and MR markets,” according to the press release.
INSW’s net asset value (NAV) will be doubled with the transaction. It will also result in annual cost synergies in excess of $23 million revenue synergies of $9 million, which will be full realized within 2022.
“We are excited to enter into this transformational transaction and create an industry bellwether,” said Lois Zabrocky, INSW’s President and CEO. “By bringing together two leading US-based diversified tanker owners, we expect to deliver a number of compelling strategic and financial benefits to the stakeholders and customers of both companies.”
“With this highly accretive merger, we also expect to realize significant cost synergies while maintaining one of the lowest net leverage ratios in global shipping and increasing our equity market capitalization and liquidity for the benefit of our shareholders,” Zabrocky said.
The combined company will maintain a $50 million share repurchase authorization and a quarterly dividend policy. Immediately prior to the closing, existing INSW shareholders will also receive a special dividend of $1.10 per share.
There merger is expected to close in the third quarter of 2021, subject to the approval of shareholders of INSW and Diamond S, regulatory approvals, and other customary closing conditions.
The Board of Directors of INSW will comprise seven representatives of INSW and three representatives of Diamond S.
“By combining our fleet and capabilities with INSW’s world-class operations, we believe the merger will significantly benefit each company’s stakeholders as market conditions improve,” said Craig Stevenson Jr., President and CEO of Diamond S. “Importantly, both INSW and Diamond S share a similar focus on people, safety, meeting customer expectation, maintaining balance sheet strength, and appropriately managing leverage in an inherently cyclical industry. As a long-time proponent of industry consolidation, I believe this transaction gives the combined company the scale and diversity necessary to hold the status as a leader in the tanker markets for years to come.”
Diamond S was represented by Seward & Kissel LLP in the transaction, led by partners Michael Timpone and Edward Horton.
Additional details of the transaction can be found in this press release.
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