Star Bulk exits Genco vessel deal as Diana keeps $1.411 billion bid

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Star Bulk Carriers has withdrawn from an agreement to acquire 16 Genco Shipping & Trading vessels, while Diana Shipping continues to pursue its proposed takeover of the dry bulk owner with $1.411 billion in committed financing.

The agreement would have transferred the vessels to Star Bulk after Diana completed its proposed acquisition of Genco. Diana and Star Bulk said they mutually terminated the arrangement on August 10 following a request from Star Bulk.

The termination removes a planned fleet transaction from the wider takeover structure but does not end Diana’s offer for the Genco shares it does not already own. Diana is Genco’s largest shareholder.

Diana Shipping said the termination would have no effect on the $1.411 billion financing secured for its proposed acquisition. The funding has been committed by six international banks and is not subject to a financing condition.

Diana’s revised offer consists of $24.80 in cash for each outstanding Genco share not already held by the company, adjusted for Genco’s recently declared dividend of $0.80. Shareholders would also receive one Diana share, valued at $2.54 based on Diana’s 30 day volume weighted average share price as of June 16.

The offer has remained with the Genco board for nearly eight weeks without a substantive response, according to Diana.

The proposed vessel sale had formed one part of the transaction, much like removing selected assets from a fleet before combining the remaining operations. Its cancellation now leaves Diana pursuing Genco without the planned transfer of 16 vessels to Star Bulk.

Diana Chief Executive Officer Semiramis Paliou said the company respected Star Bulk’s decision to leave the arrangement and would continue seeking direct engagement with Genco.

“The termination of the agreement eliminates one of Genco’s concerns regarding our proposal and our fully financed offer remains on the table,” Paliou said.

She called on the Genco board to negotiate directly and in good faith on a transaction that Diana believes would deliver full and fair value to Genco shareholders.

Star Bulk Chief Executive Officer Petros Pappas said the company had supported Diana’s proposed takeover because it viewed the offer as an opportunity to create value for Genco shareholders.

Pappas attributed Star Bulk’s withdrawal to what he described as the Genco board’s unwillingness to negotiate. He said that position had prevented shareholders from accessing the proposed opportunity and prompted Star Bulk to move on from the vessel purchase agreement.

Star Bulk continues to operate a dry bulk fleet carrying iron ore, minerals, grain, bauxite, fertilizers and steel products. Diana’s vessels are primarily employed on short to medium term time charters carrying commodities including iron ore, coal and grain along global shipping routes.