Overseas Shipholding Group, Inc. signed a definitive merger agreement to acquire Stelmar Shipping Ltd.
, an international provider of petroleum product
and crude oil
transportation services with one of the world's largest and most modern Handymax and Panamax tanker fleets.
Under the terms of the merger agreement, holders of Stelmar's common
stock will receive $48.00 per share in cash upon the closing of the
merger, implying an aggregate equity market value of $843 million for
Stelmar. Taking into account Stelmar's outstanding debt, the total
value of the transaction is approximately $1.3 billion.
"The acquisition of Stelmar will establish a leading platform for OSG (OSG.F)
in product tankers and Panamax tankers and fulfill an important
strategic objective for OSG," said Morten Arntzen
, President and Chief
Executive Officer of OSG. "This acquisition will be accretive to
earnings from inception and will complement OSG's already leading
positions in the VLCC and Aframax sectors and its recent entry into the
LNG sector," Mr. Arntzen continued. "Upon completion of the Stelmar
acquisition, OSG will be the second largest publicly traded oil tanker
company measured by number of vessels and the third largest measured by
deadweight tons. The combined company will have a fleet of 91
international flag vessels totaling 12.9 million deadweight tons. The
combined international flag fleets will be among the youngest fleets in
the industry, and 96% of the vessels will be double-hulled or
double-sided," Arntzen concluded.
The acquisition provides OSG with:
-- The addition of the Stelmar fleet (comprising 24 Handymax
product tankers, 13 Panamaxes and 3 Aframaxes) will result
in OSG being a global leader in both crude and product tanker
Myles Itkin, Chief Financial Officer of OSG, stated "OSG will finance
the transaction with cash and funds available under its existing credit
facilities." Mr. Itkin went on to say that "OSG has reported record
time charter equivalent revenues of $513.9 million and earnings of
$190.1 million for the nine months ended September 30, 2004 by focusing
on crude transportation with
spot orientation. During the same period,
Stelmar has reported record time charter equivalent revenues of $167.0
million and earnings of $40.6 million by focusing on product tankers
and Panamaxes with time charter orientation. Following the acquisition,
OSG will have a more balanced mix of spot and time charter revenue
which will improve both the quality and sustainability of OSG's future
The transaction is subject to approval by a majority of Stelmar's
shareholders and satisfaction of customary closing conditions. The
transaction is expected to close by the end of January 2005.
UBS Investment Bank is acting as OSG's sole financial advisor and
Cravath, Swaine & Moore LLP
is acting as legal counsel in connection
with the transaction.