BW LPG makes all share offer to acquire Dorian LPG

Written by Nick Blenkey
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MAY 30, 2018 — Consolidation ahead in the LPG carrier sector? BW LPG Limited (OSE: BWLPG) yesterday announced a proposal to combine with Dorian LPG Ltd. (NYSE: LPG) in an all-stock transaction.

The combined company would be a leading owner and operator of modern VLGCs, with 73 total vessels in its fleet including 70 VLGCs, and 3 LGCs, with an aggregate fleet capacity of 6.0 million cubic meters.

Dorian LPG confirmed that it had received an unsolicited proposal from BW LPG. It said that its Board of Directors would review BW’s proposal in consultation with its financial and legal advisors, adding that, “no assurance can be given that any transaction will occur.”

Under the BW LPG proposal, Dorian shareholders would receive 2.05 BW LPG shares for each Dorian share. As part of the proposed transaction, BW LPG intends to dual-list on the New York Stock Exchange so that Dorian shareholders would receive at closing NYSE listed BW LPG shares, representing in the aggregate 45% of the combined company at the completion of the transaction.

The proposal is supported by BW Group, which owns 14.2% of Dorian and approximately 45% of BW LPG.

BW LPG says it proposal to acquire Dorian represents a value of $7.86 per share of Dorian common stock based on BW LPG’s closing share price of NOK 31.42 on May 28, 20181. The total equity value of the transaction is approximately $441 million on a net asset value basis and the total enterprise value is $1.1 billion, including the assumption of net debt. The proposal represents a premium of 13% to the closing Dorian share price on May 25, 2018 of $6.96 per share; a premium of 15% to the long-term historical exchange ratio of Dorian and BW LPG since Dorian’s IPO; and an EV to EBITDA multiple of 13.9x based on reported LTM EBITDA to December 31, 2017.

BW LPG Chief Executive Officer, Martin Ackermann, said, “Our proposal represents a unique and compelling opportunity to maximize value for both Dorian and BW LPG shareholders. Combining Dorian’s high quality fleet and operating platform with BW LPG’s vessels and expertise would create a larger combined fleet with better geographical coverage to drive value for our customers. Our proposal also provides Dorian shareholders with the opportunity to benefit from ownership of a larger company with enhanced trading liquidity that is better positioned for long-term growth and success.”

Andreas Sohmen-Pao, Chairman of BW LPG and BW Group, commented, “We think highly of Dorian’s fleet, management and operating principles. The proposed combination would advance our vision to be a great shipping company, creating long-term value for our customers and shareholder

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