Combined company will have an enterprise value of around $2bn and a fleet of 100 vessels
International Seaways (INSW) has agreed to merge with rival US-based tanker company Diamond S Shipping in an all-stock deal worth around $416m.
The two companies are engaged in offering energy transportation services for crude oil and petroleum products in global markets.
Diamond S Shipping’s shareholders will be issued 0.55375 shares of International Seaways’ common stock for each of the shares held in Diamond S Shipping.
International Seaways will assume Diamond S Shipping’s net debt, which stood at $565m at the end of last year.
Following the merger, International Seaways’ shareholders will have a stake of around 55.75% in the combined firm, while Diamond S Shipping’s shareholders will hold a stake of 44.25%.
The combined company, which will operate as International Seaways, will be the second largest US-listed tanker company on the basis of vessel count.
With an enterprise value of around $2bn, the combined entity will also be the third largest tanker company by deadweight.
It will have 100 vessels, shipping revenues of more than $1bn, and a workforce of over 2,200 employees.
International Seaways president and CEO Lois Zabrocky said: “By bringing together two leading US-based diversified tanker owners, we expect to deliver a number of compelling strategic and financial benefits to the stakeholders and customers of both companies.
“Specifically, with our enhanced scale and capabilities combined with a best-in-class ESG track record, we are ideally positioned to meet the evolving needs of leading energy companies and capitalize on favourable long-term industry fundamentals.”
Lois Zabrocky will be the CEO of the combined company.
Currently, International Seaways has a fleet of 36 vessels. These include 11 very large crude carriers (VLCCs), two Suezmaxes, four Aframaxes/large range (LR)2s, 13 Panamaxes/LR1s, and four medium range (MR) tankers.
On the other hand, Diamond S Shipping has a fleet of 64 vessels, which include 13 Suezmaxes, one Aframax, and 50 MR tankers.
Diamond S Shipping president and CEO Craig Stevenson Jr. said: “By combining our fleet and capabilities with INSW’s world-class operations, we believe the merger will significantly benefit each company’s stakeholders as market conditions improve.
“Importantly, both INSW and Diamond S share a similar focus on people, safety, meeting customer expectation, maintaining balance sheet strength, and appropriately managing leverage in an inherently cyclical industry.
“As a long-time proponent of industry consolidation, I believe this transaction gives the combined company the scale and diversity necessary to hold the status as a leader in the tanker markets for years to come.”
The merger, which is subject to shareholders’ approval for both the companies, regulatory approvals, and other customary closing conditions, is anticipated to close in Q3 2021.
A group of shareholders with nearly 14% and 29% stakes in International Seaways and Diamond S Shipping, respectively, is backing the transaction.
In March 2021, Royal Dutch Shell entered into a charter agreement with International Seaways for three VLCCs powered by dual-fuel liquefied natural gas (LNG) engines.