OSG to buy Stelmar in $1.3 billion deal
Stelmar Shipping Ltd. (NYSE:SJH - News) today announced that it has signed a definitive agreement with Overseas Shipholding Group, Inc. (NYSE:OSG - News) under which OSG will acquire Stelmar for $48.00 in cash per share of Stelmar common stock. The agreement was unanimously approved by Stelmar's Board of Directors. The price represents a premium of 92% over the closing price of Stelmar's common stock on May 14, 2004, the last trading day prior to the announcement of a proposal for a business combination involving Stelmar, and a premium of 8% over the closing price of Stelmar's common stock on December 10, 2004. The transaction has an aggregate equity market value of $843 million and a total value, including Stelmar's outstanding debt, of $1.3 billion.
The agreement resulted from the process conducted by a special committee of Stelmar's Board of Directors to solicit and negotiate proposals for the sale of Stelmar following shareholders' earlier rejection of an offer of $40 per share from affiliates of Fortress Investment Group. The OSG transaction is subject to approval by Stelmar's shareholders and other customary conditions. The companies expect to complete the transaction by the end of January 2005.
"The special committee of the Stelmar Board conducted a fair, open and thorough process for soliciting proposals for the sale of Stelmar, and we are pleased with the agreement we have reached with OSG," said Ray Miles, chairman of the special committee. "The committee has solicited the views of Stelmar's major shareholders throughout this process, and we believe that this transaction represents substantial value to all of our shareholders. We also expect that the combination of our two companies and our complementary fleets will create important benefits for our customers."
Morgan Stanley & Co. Incorporated and Jefferies & Company are serving as financial advisors to Stelmar. Morgan Stanley & Co. Incorporated also provided a fairness opinion to Stelmar in connection with the transaction.
Separately, "in order to minimize potential distractions during the shareholder review of the OSG transaction," the Stelmar Board says it has approved an amendment to the Company's By-Laws that extends the period of time during which Stelmar shareholders may submit proposals to bring business before, and to nominate persons for election as directors at, any annual meeting of Stelmar shareholders. Under the Company's amended By-Laws, shareholders may submit proposals or nominations for consideration at the Company's 2005 Annual General Meeting by February 8, 2005. The Stelmar announcement notes that "a significant shareholder has previously announced his intention to nominate directors for election at the Company's 2005 Annual General Meeting."
That shareholder, of course is company founder Stelios Hadji-Ioannu, who today released this comment:
"This is the vindication of my efforts over the last month during which the value of our company has increased by some $170 million above the level at which the directors were telling Stelmar shareholders to sell to Fortress!
"I am glad the non executives on the Stelmar board learned from their mistakes and excluded the management from the new process. I elected not to be part of the committee of the board conducting this new process and I have not expressly approved this deal. I was, however, consulted by Stelmar's investment bankers over the weekend and unlike the last time, I have no misgivings about the process this time. Like all Stelmar shareholders I am delighted to have a new floor to our share price and I will be evaluating the deal in relation to market conditions closer to the vote date.
"I would like to use this opportunity to thanks the middle management and staff of Stelmar for all their hard work over the last 12 years. I think the fact that their leadership failed them does not detract from the great job they have done taking Stelmar from the dream of a 25 year old to a company worth $843 million in 12 years."
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