BW LPG increases all-stock proposal for combination with Dorian in transaction valued at $1.1 billion
BW LPG Limited (“BW LPG”) has increased its all-stock proposal to combine with Dorian LPG Ltd. (“Dorian”) (NYSE: LPG), under which Dorian shareholders would receive 2.12 BW LPG shares for each Dorian share, the Company said in a media release.
BW LPG also announced its intention to nominate independent, highly qualified individuals to stand for election to Dorian’s Board of Directors at Dorian’s 2018 Annual Meeting of Shareholders.
The revised proposal, which has been unanimously approved by the BW LPG Board of Directors, represents a value of $8.67 per share of Dorian common stock based on BW LPG’s closing share price of NOK 32.86 on July 6, 2018. The total equity value of the transaction is approximately $479 million and the total enterprise value is approximately $1.1 billion, including the assumption of net debt. The revised proposal represents a premium of 25% to the closing Dorian share price on May 25, 2018, the last trading day prior to the announcement of BW LPG’s initial proposal, of $6.96 per share and a premium of 19% to the long-term historical exchange ratio of Dorian and BW LPG since Dorian’s IPO.
Since announcing its initial proposal on May 29, 2018, BW LPG has had conversations with many shareholders of both companies, and the sentiment to BW LPG’s merger proposal has been overwhelmingly positive with many shareholders expressing surprise at Dorian’s refusal to engage. The combination of BW LPG and Dorian would create a leading owner and operator of modern VLGCs, and shareholders realize the significant benefits it would bring to stakeholders of both companies, including a combined fleet with better geographical coverage that will enable customers to receive improved utilization, scheduling and positioning. Dorian and its shareholders would benefit from significant synergies, increased market capitalization, and a stronger credit profile. In addition, the increased scale of the combined company would translate into additional earnings and cash flow accretion for Dorian shareholders. These benefits would better position the combined company for all potential future trading environments. The proposal is supported by BW Group, which owns 14.2% of Dorian and approximately 45% of BW LPG.
Although the Company remains open to engaging in dialogue with Dorian, BW LPG intends to nominate independent, highly qualified directors to stand for election to Dorian’s Board at its upcoming Annual Meeting.
BW LPG Chief Executive Officer, Martin Ackermann, said, “By increasing our offer at this time, we are reaffirming BW LPG’s belief that this transaction will deliver significant value to both companies’ stakeholders and that the time to act is now. It is evident from our discussions with Dorian shareholders that there is strong support for the companies to engage immediately regarding our proposed combination and capitalize on this compelling opportunity.”