Taylor Maritime Investments (TMI) is making a takeover offer for Grindrod Shipping that values the bulker owner at $494m.
London-listed TMI, which already holds a 26% stake in Singapore and Nasdaq-listed Grindrod, would use a non-binding cash offer of $26 per share to create an enlarged owner of handysizes up to ultramax bulkers.
Monday’s disclosure in effect confirms a 6 April TradeWinds report indicating Grindrod was in play after it chose not to seek a permanent successor to retired chief executive Martyn Wade.
The announcement provides further fingerprints as to a months-long merger-and-acquisition process underway, as Grindrod disclosed that it had hired Jefferies as financial advisor, as well as three law firms.
TMI is understood to have emerged from a pack that included multiple other public companies. Potential suitors named by TradeWinds in April included US-listed Genco Shipping & Trading and Eagle Bulk Shipping, plus Hong Kong-listed Pacific Basin.
Grindrod’s share price shot up in trading on Monday in New York upon the announcement, with shares up nearly 20% to $24.54 in early afternoon.
The UK handysize specialist said the offer for an aggregate value of $26 per share would consist of a cash purchase price of $21 paid by TMI for each share tendered in conjunction with a special cash dividend from Grindrod of $5 per share to its existing shareholders.
TMI said the deal represents an “exciting opportunity” to combine the fleets into one “significant owner” in its vessel sizes.
“The complementary nature of the companies’ fleets and enhanced operational scale in the geared dry bulk sector will create meaningful additional value for shareholders and customers that both companies serve,” it added.
Evercore and Rand Merchant Bank have been appointed as financial advisors to TMI.
The proposed acquisition is subject to preconditions being met and due diligence.
The offer price presents a 30% premium to Grindrod’s closing of $20.05 on 26 August. The share has not closed above $26 since 7 June.
Although the bid may be below Grindrod’s net asset value (NAV), estimated at around $30 per share, the all-cash feature may prove attractive to Grindrod shareholders, a finance source told TradeWinds.
“All-cash tender offers are exceedingly rare in shipping,” the source said. “It’s similar to someone willing to pay all cash for your house in the real-estate market. When such offers have been made, there is typically a much bigger gap to NAV than here.”
In July, TMI reported strong profits consisting of net earnings of $253m for the year to 31 March.
TMI, which listed in 2021 and so did not give a comparison, said the results comprised $79m in operating profit and $174m in fair value gain as it benefited from strong bulker markets.
“We remain confident that market fundamentals will lead well into 2024,” chairman Nicholas Lykiardopulo said at the time.
TMI currently holds 4.9m shares in Grindrod. It would therefore need to win support from a further 21% of Grindrod shareholders to gain effective control.
