The merger of BW LPG and Dorian LPG would create an industry leading player with a fleet of 73 vessels, with a capacity of 6m cu m, focused heavily on the Very Large Gas Carrier (VLGC) segment with 68 VLGCs on the water and further two newbuildings.
BW LPG’s parent, Andreas Sohmen-Pao helmed BW Group, already owns a 14.2% stake in Dorian, and is proposing a merger through an all-stock transaction where Dorian LPG shareholders would receive would receive 2.05 shares in BW LPG for each share in Dorian LPG. The proposal represents a value of $7.86 per share of Dorian LPG stock equating to a total enterprise value for the deal of $1.1bn.
“Combining Dorian’s high quality fleet and operating platform with BW LPG’s vessels and expertise would create a larger combined fleet with better geographical coverage to drive value for our customers,” said Martin Ackermann, ceo of BW LPG.
BWLPG said the merger would enhance trading liquidity and provide a stronger credit profile allowing for greater financial flexibility going forward. Financial and operational synergies are “conservatively estimated” at a $15m annual run-rate savings.
As part of the transaction Oslo-listed BW LPG plans a dual listing on the New York Stock exchange (NYSE).
It is the latest consolidation by BW Group, which has undertaken a number of transactions in different sectors of the industry.
In a letter to John Hadjipateras chairman, president and ceo of Dorian LPG, Sohmen-Pao, chairman of BW LPG and BW Group, said: “We think highly of Dorian’s fleet, management and operating principles. We share your vision to build a high quality LPG shipping fleet and agree with Dorian’s publicly-stated views regarding the strategic and financial benefits of industry consolidation.
“We believe a combination would provide our respective shareholders with the opportunity to own a larger, stronger company in the midst of challenging industry conditions.”
The proposal would require simple majority shareholder approval from BW LPG shareholders, with BW, which owns a 45% stake, having already supported the transaction.
BW LPG said it was “prepared to engage expeditiously” to complete the transaction.