International Seaways, Diamond S create 2nd largest US-listed tanker company
New York-based tanker company International Seaways (INSW) has decided to merge with Greenwich-based energy shipping company Diamond S Shipping.
The two companies’ Boards of Directors have unanimously approved a definitive merger agreement pursuant to which INSW will merge with Diamond S in a stock-for-stock transaction.
Subsequent to the merger, INSW and Diamond S shareholders will own approximately 55.75% and 44.25% of the combined company, respectively, using fully diluted share counts as of 30 March 2021.
As explained, the merger of Diamond S with INSW unites two companies with long-term customer relationships, similar cultures, and complementary positions in key tanker sectors.
Specifically, the business combination will enhance INSW’s capabilities in both the crude and product markets and create “power alleys” for INSW in the large crude -VLCC and Suezmax– and LR1/Panamax and MR markets.
The merger will create the second-largest US-listed tanker company by vessel count and the third-largest by deadweight. On a pro forma basis, the combined company will have 100 vessels, shipping revenues of over $1 billion, over 2,200 employees, and an enterprise value of approximately $2 billion.
“We are excited to enter into this transformational transaction and create an industry bellwether,” Lois Zabrocky, INSW’s President and CEO, commented.
“By bringing together two … US-based diversified tanker owners, we expect to deliver a number of compelling strategic and financial benefits to the stakeholders and customers of both companies. Specifically, with our enhanced scale and capabilities combined with a best-in-class ESG track record, we are ideally positioned to meet the evolving needs of leading energy companies and capitalize on favorable long-term industry fundamentals.”
“With this highly accretive merger, we also expect to realize significant cost synergies while maintaining one of the lowest net leverage ratios in global shipping and increasing our equity market capitalization and liquidity for the benefit of our shareholders,” he added.
“We look forward to joining forces with Diamond S and continuing to meet the highest operational standards with an unwavering focus on safety and sustainability in the maritime sector. We believe the combined company is well positioned to capitalize on opportunities in both the current market environment and well into the future,” Douglas Wheat, Chairman of INSW’s Board of Directors, said.
“By combining our fleet and capabilities with INSW’s … operations, we believe the merger will significantly benefit each company’s stakeholders as market conditions improve,” Craig Stevenson Jr., President and CEO of Diamond S, noted.
Douglas Wheat, Lois Zabrocky and Jeffrey Pribor will continue to serve as the Chairman of the Board of Directors, Chief Executive Officer and Chief Financial Officer of INSW, respectively, and the current CEO of Diamond S, Craig Stevenson Jr., will join the Board of Directors of INSW, and also act as a special advisor to the CEO for a 6-month period to ensure a smooth transition.
The merger, which is expected to close in the third quarter of 2021, is subject to the approval of the shareholders of INSW and Diamond S, regulatory approvals, and other customary closing conditions.
INSW owns and operates a fleet of 36 vessels, including 11 VLCCs, 2 Suezmaxes, 4 Aframaxes/LR2s, 13 Panamaxes/LR1s and 4 MR tankers. Through joint ventures, it has ownership interests in two floating storage and offloading service vessels.
Diamond S Shipping owns and operates 64 vessels on the water, including 13 Suezmaxes, 1 Aframax and 50 MR tankers.