OSG set to be acquired by Saltchuk
Written by Nick Blenkey
OSG president and CEO Sam Norton: “This transaction partners us with an organization that shares our values and focus on customers.”
Shares in NYSE-listed U.S.-flag tanker and ATB operator Overseas Shipholding Group Inc. (OSG) were trading up this morning on news that it has entered into a definitive merger agreement that will see it acquired by Saltchuk Resources Inc. Saltchuk first made an offer for OSG in 2021, then made a new offer in January of this year.
Under the terms of the merger agreement, family-owned Saltchuk will commence a tender offer to acquire all outstanding shares of OSG it does not already own for $8.50 per share in cash. The deal values OSG at an aggregate equity value of approximately $653 million and a total transaction value of $950 million.
The purchase price represents a 61% premium to OSG’s 30-day volume-weighted average price on January 26, 2024, the last day of trading before Saltchuk disclosed its non-binding indication of interest, as well as a 44% premium to the January 26 closing price of OSG’s shares and a 36% premium to Saltchuk’s initial indicative price of $6.25 per share.
“We are pleased to have reached an agreement that reflects our leading Jones Act business, longstanding customer relationships, and the value created by the OSG team over the past several years,” said Douglas D. Wheat, chairman of the OSG board. “Following Saltchuk’s indication of interest to buy the company at the end of january, the board of directors, with the assistance of external financial and legal advisors, undertook a review of the company’s financial and strategic alternatives, including remaining a publicly held company. As part of that review, the board conducted a comprehensive process in which it engaged with Saltchuk and approached and engaged with other potential transaction counterparties. Informed by its review and that process, the board firmly believes Saltchuk’s increased offer represents compelling value to, and is in the best interest of, our shareholders not affiliated with Saltchuk.”
“We are excited to enter into this new chapter together with Saltchuk, which has been a significant shareholder of OSG over the past several years and has a close understanding of our business,” said Sam Norton, OSG’s president and CEO. “Saltchuk’s operating companies have distinguished themselves in their respective segments, and this transaction partners us with an organization that shares our values and focus on customers. We are thrilled to soon join the Saltchuk family of companies.”
Mark Tabbutt, chairman of Saltchuk Resources, said: “OSG, our nation’s leading domestic marine transporter of energy, has a strong cultural fit with Saltchuk and shares our commitment to operational safety, reliability, and environmental stewardship. On behalf of the Saltchuk organization, we look forward to welcoming more than 1,000 members of the OSG team to our family of companies and growing the enterprise through multi-generational investments.”
Following the close of the transaction, OSG will operate as a standalone business unit within Saltchuk, becoming a member of a family of companies that includes such well-known U.S. maritime players as TOTE, Foss and Young Brothers.
The transaction is not subject to a financing condition. It will be funded through a combination of committed debt financing and cash on hand.
Evercore is acting as exclusive financial advisor to OSG and Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal advisor to OSG. K&L Gates LLP is acting as legal advisor to Saltchuk and BDT & MSD Partners is acting as Saltchuk’s financial advisor.
