BW drops pursuit of Dorian LPG

Andreas Sohmen-Pao's BW LPG has dropped its pursuit of rival Dorian LPG due its “continued refusal to give a meaningful response”.

BW LPG announced on Monday it was withdrawing its all share takeover offer for Dorian LPG, which had been rebuffed by Dorian's board who had refused to put it to shareholders. BW LPG also withdrew its candidates for Dorian's board of directors.

Read more: Dorian LPG rejects BW LPG takeover offer

In a letter to John Hadjipateras, chairman, president and ceo of Dorian, Sohmen-Pao chairman of BW Group said: “It has been over four months since we proposed a combination of BW LPG and Dorian, and nearly three months since we improved our proposal. To date, we have not had a formal response to our increased offer, and our meetings with you have not given any indication that you are willing to work towards a mutually beneficial outcome."

Hadjipateras of Dorian responded in a letter to Sohmen-Pao that: "As you know, but failed to note in your letter, we extensively engaged with your team over the past few months. In addition to our initial meeting and your presentation to our Board, two weeks ago we had a meeting that lasted multiple hours (with your and our advisors) where we extensively commented on your proposal and indicated the valuation parameters implied by a fair assessment of both companies."

While BW still believes in the benefits of the offer it has been withdrawn. "Although we continue to believe in the benefits of the proposed merger, and that a combination would be highly beneficial for your shareholders, we are first and foremost committed to acting in the best interests of BW LPG’s shareholders. Accordingly, we hereby withdraw our proposal," Sohmen-Pao said.

The letter reiterated what BW believes were the favourable terms of the takeover offer inlcuding Dorian was offered 46% of the combined company even though it only contributed 30% of the revenue-generating units and 25% of the revenue to the combined entity Hadjipateras responded that BW had undervalued Dorian on a Net Asset Value basis when "as your calculations overvalue your older, less fuel-efficient vessels and undervalue our young, fuel-efficient vessels". It was also note dthat unlike previous transaction there was no permium to NAV.

Sohmen-Pao also expressed concern over the lack of response from Dorian. 'From a governance point of view, we are concerned by the lack of a meaningful response, and it has become apparent that your approach to shareholder value creation differs from ours. We note that an Annual Meeting of Shareholders has not been called to date, more than 12 months after your last shareholder meeting. We believe that this is neither shareholder-friendly nor in line with good governance practices,” the letter said.

Posted 08 October 2018

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Marcus Hand

Editor, Seatrade Maritime News

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