BW LPG has withdrawn its offer to merge with rival LPG shipping company Dorian LPG after the parties failed to reach an agreement over the deal.
As per the terms of the proposed all-stock deal worth $1.1bn, BW LPG, a Singaporean liquefied petroleum gas shipping (LPG) transportation fleet owner, would issue 2.12 of its shares in exchange of each share of the US LPG shipping company.
BW LPG blamed Dorian LPG for continuously refusing to give a “meaningful response” to its proposal and also for not engaging in constructive two-way talks, or schedule an annual meeting.
BW LPG board of directors chairman Andreas Sohmen-Pao, in a letter to Dorian LPG chairman, president and CEO John Hadjipateras, said: “We believe this is a lost opportunity for Dorian shareholders and for the industry, but remain open to a future conversation should your board and shareholders become convinced of the merits of consolidation.”
The US firm refuted the charges put on it by the Singaporean LPG shipping company, saying that it had engaged extensively with the latter’s team during the last few months.
Dorian LPG also said that it did take part in meetings with BW LPG over the proposed merger. The US company maintained its stand that the proposal had undervalued its business on a relative net asset value basis.
Dorian LPG also added that BW LPG had overvalued its “older, less fuel-efficient” vessels while undervaluing its “young, fuel-efficient” vessels.
BW LPG, on the other hand, said that it had offered a stake of 46% to Dorian LPG in the enlarged company formed through the merger. This it said was despite the US firm contributing only 30% of its revenue-generating units and 25% of the revenue to the combined company.
Hadjipateras, in reply to Sohmen-Pao’s letter, wrote: “To explore the full range of value-creating opportunities available to Dorian LPG, we asked several times if you could improve your proposal, and left the door open to further discussion and a response to the issues that we outlined in our latest meeting.
“Instead, you have refused to consider improving your proposal and, most recently, have withdrawn your proposal.”