Hold out for more.

That essentially is the advice of a US investment bank for shareholders of Singapore-based Grindrod Shipping after a $26-per-share all-cash offer from Taylor Maritime Investments (TMI).

Noble Capital researcher Michael Heim weighed in on Tuesday with analysis indicating that Nasdaq-listed Grindrod is worth more than TMI’s original offer.

“We believe there is a reasonable chance that a transaction will be completed at a higher price, closer to our price target,” Heim told clients, citing a $31 figure.

“We do not expect Grindrod’s board of directors to accept the offer as proposed. We believe other suitors could offer a higher takeout price or TMI may raise its offer to get the board’s support of the deal.

“We would advise investors to use our $31 price target as a guide to investment decisions regarding the shares of [Grindrod].”

Grindrod tipped the news on Monday that London-listed TMI, which already holds a 26% stake in the company, would use a non-binding cash offer of $26 per share to create an enlarged owner of handysize up to ultramax bulkers.

The UK handysize specialist said the $26 offer would consist of a cash purchase price of $21 paid by TMI for each share tendered, plus a $5-per-share special dividend. The offer values Grindrod at $494m.

As TradeWinds has reported, the Taylor offer is not a sudden or one-off development. Grindrod has been in play since at least April, when it decided not to appoint a permanent replacement for retired chief executive Martyn Wade.

TMI emerged from a pack that included other public owners, with New York-listed Genco Shipping & Trading and Eagle Bulk Shipping tipped to be among the interested parties.

Competing offers from such parties might be expected to include full or partial payment in shares, whose value could somewhat depend on what one thinks of long-term prospects for the dry bulk market.

However, one finance source speaking after Monday’s disclosures said TMI’s willingness to pay all cash should be viewed as a strength of the bid, even below Grindrod’s estimated net asset value (NAV) of around $30.

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“All-cash tender offers are exceedingly rare in shipping,” he said. “When such offers have been made, there is typically a much bigger gap to NAV than here.”

The offer price presents a 30% premium to Grindrod’s closing price of $20.05 on Friday. The shares have not closed above $26 since 7 June.

However, Heim noted that Grindrod had traded as high as $28.98 per share on 20 May, before dry bulk rates took a tumble that also deflated stock prices.