Today, shares of Overseas Shipholding Group, Inc. (NYSE: OSG) are witnessing a significant 22.76% surge in its stock price, climbing to $8.42 following the announcement of a definitive merger agreement.
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Merger Agreement Unveiled
Overseas Shipholding (OSG) and Saltchuk Resources, Inc have officially disclosed their merger agreement. With this agreement, Saltchuk will purchase OSG for an estimated $950 million in total transaction value, which translates to about $653 million in total equity value.
According to the conditions of the merger, Saltchuk will launch a tender offer to buy all of the outstanding shares of OSG that he does not presently hold for $8.50 per share in cash. Unanimous approval for this agreement was secured from both companies’ boards of directors.
Before Saltchuk’s non-binding statement of interest was unveiled on January 26, 2024, the 30-day volume-weighted average price of OSG fell short of the purchase price by 61%, indicating a substantial premium. It also represents a 44% premium over OSG’s closing price on January 26 and a 36% premium over Saltchuk’s first recommended price of $6.25 per share.
Strategic Decision And Review Process
Overseas Shipholding has reached this agreement acknowledging its prominent Jones Act business, enduring client relationships, and the value generated by its team in recent years. Following Saltchuk’s expression of interest in acquiring the company in late January, the Board of Directors of OSG, aided by external financial and legal advisors, conducted a thorough review of the company’s financial and strategic options, including the possibility of remaining a publicly traded entity.
This comprehensive assessment involved engaging with Saltchuk and exploring discussions with other potential transaction partners. Guided by this evaluation, the Board is firmly convinced that Saltchuk’s enhanced offer delivers compelling value to OSG shareholders not associated with Saltchuk and aligns with their best interests.
Post-Merger Operations
Upon completion of the transaction, Overseas Shipholding will continue its operations as a distinct business unit under Saltchuk’s umbrella, becoming an integral part of its array of diversified freight transportation, marine service, and energy distribution enterprises.
It also represents a 44% premium over OSG’s closing price on January 26 and a 36% premium over Saltchuk’s first recommended price of $6.25 per share.
