Star Bulk and Eagle Bulk Agree to $2.1 Billion Merger

Dry bulk shipping companies Star Bulk Carriers and Eagle Bulk Shipping have reached a deal to merge in a $2.1 billion all-stock deal.

The terms of the definitive agreement have received unanimous approval from the boards of directors of both New York-listed ocean carriers, and the companes expect the deal to close in the first half of 2024 following approvals from regulators and Eagle shareholder.

Eagle shareholders will receive 2.6211 shares of Star Bulk common stock for each share of Eagle common stock owned. This represents a total consideration of approximately $52.60 per share, a 17% premium based on Eagle’s closing share price of $44.85 on December 8, 2023. Upon the close of the transaction, Star Bulk and Eagle shareholders will own approximately 71% and 29% of the combined company on a fully diluted basis, respectively.

The combined company—to operate as Star Bulk Carriers under the leadership of current Star Bulk management and select Eagle senior executives—will be the largest U.S. listed dry bulk shipping company with a combined fleet of 169 owned-vessels ranging from Newcastlemax/Capesize to Supramax/Ultramax vessels. The combined company will be headquartered in Athens, Greece, with offices in Stamford, Conn.; Singapore; Copenhagen; and Limassol.

Petros Pappas, CEO of Star Bulk, said, “Bringing together Star Bulk and Eagle will create a global leader in dry bulk shipping with a large, diversified, scrubber fitted fleet. Together we will benefit from greater scale with 169 owned vessels, generating meaningful synergies and building an even stronger financial profile. We will leverage both companies’ technical and commercial fleet management capabilities to optimize performance, deliver on our health, safety, and environmental objectives and maximize earnings potential. With a well-capitalized balance sheet, we aim to continue delivering strong cash returns to shareholders while investing in emission reduction technologies as we continue to pursue growth over the long term. We look forward to working with the talented Eagle team to successfully integrate the two companies.”

Gary Vogel, Eagle CEO, said, “We are very excited to be joining forces with Star Bulk, uniting two best-in-class companies, both commercially and operationally. We are bringing together two highly complementary organizations and are confident that this accretive merger with Star Bulk will unlock significant value for Eagle shareholders, including the opportunity to participate in the long-term upside of the combined company.”

Pappas will serve as CEO, and Spyros Capralos, current chairman of Star Bulk, will serve as chairman of the combined company’s board. One member of the Eagle board will join the Star Bulk board at closing.

The companies said they expect the transaction to generate at least $50 million in annual cost and revenue synergies within 12-18 months following close through commercial operations integration and economies of scale, including reductions in general and administrative expenses.

The combined company is expected to have combined liquidity of nearly $420 million, as of September 30, 2023, and net leverage of approximately 37%. Both companies expect to maintain their respective dividend policies until the transaction is completed. Following close, the combined company expects to maintain Star Bulk’s current dividend policy.

The combined company will have significantly increased pro forma market capitalization and expected trading liquidity in the dry bulk sector. With increased size and liquidity, the combined company expects to reduce its cost of capital.