BW LPG made an all stock takeover offer, valued at $1.1bn, for Dorian LPG towards the end of May, building on a 14.2% stake it already owned.
Dorian LPG said that its board of directors had unanimously rejected the proposed takeover offer.
Read more: BW LPG makes $1.1bn offer for Dorian LPG
In a letter to BW LPG and BW Group chairman Andreas Sohmen-Pao, John Hadjipateras chairman, president and ceo of Dorian LPG said the proposal undervalued the company both on an absolute and relative basis.
He said the offer failed to recognise the value of Dorian LPG’s 19 eco-ships which comprised 86% of its fleet of 22 ships, whereas eco-ships comprised just 40% of BW LPG’s 51 vessel fleet.
“Dorian has already invested substantial capital to comply with regulation-driven ship modifications. Our understanding is that the BW LPG fleet will require significant additional capital investment to modernize and comply with regulatory requirements,” Hadjipateras said.
“Dorian shareholders should not be asked to subsidize BW LPG's fleet renewal, upgrade, and regulatory compliance costs.”
He also cited the higher earnings power of vessels in Dorian LPG’s fleet, and that while the deal would improve BW LPG’s financial flexibility it would do the opposite for Dorian.
Having firmly rejected the BW LPG proposal Hadjipateras turned the tables. “Notwithstanding declining your proposal, our Board is willing to discuss acquiring or consolidating some or all of your 17 eco-ships into our commercial platform. We believe that such a proposal would allow for a more transparent relative valuation and could be concluded relatively expeditiously.”