BW LPG proposes to combine with Dorian in all-stock transaction valued at USD $1.1 billion
BW LPG Limited announced a proposal to combine with Dorian LPG Ltd. in an all-stock transaction. Dorian shareholders would receive 2.05 BW LPG shares for each Dorian share, the company said in its press release. Pursuant to the proposed transaction, BW LPG intends to dual-list on the New York Stock Exchange (“NYSE”) such 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’s proposal to acquire Dorian represents a value of USD $7.86 per share of Dorian common stock based on BW LPG’s closing share price of NOK 31.42 on May 28, 2018* (*Represents NOK/USD exchange rate of 8.193). The total equity value of the transaction is approximately USD $441 million on a NAV to NAV basis and the total enterprise value is USD $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 USD $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.”
Together, Dorian and BW LPG 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.
The Company expects the transaction would generate significant free cash flow accretion to Dorian shareholders and substantial financial and operational synergies that are conservatively estimated at USD $15 million of annual run-rate savings.
