Both Overseas Shipholding Group, Inc. (“OSG”) and Saltchuk Resources, Inc. (“Saltchuk”) have announced that they have signed a definitive merger agreement. Under the terms of the agreement, Saltchuk has committed to buy OSG in a deal that values OSG at a total transaction value of $950 million, with an approximate equity value of $653 million.
The Board of Directors of both businesses has unanimously accepted the terms of the agreement, which states that Saltchuk will launch a tender offer to purchase all outstanding shares of OSG that it does not already own for $8.50 per share in cash. In addition to representing a 44% premium to the closing price of OSG’s shares on January 26, 2024, and a 36% premium to Saltchuk’s initial indicative price of $6.25 per share, the purchase price represents a 61% premium to OSG’s 30-day volume-weighted average price on the last day of trading prior to Saltchuk disclosing its non-binding indication of interest.
“We are pleased to have reached an agreement that reflects our leading Jones Act business, longstanding customer relationships, and the value created by the OSG team over the past several years. Following Saltchuk’s indication of interest to buy the Company at the end of January, the Board of Directors, with the assistance of external financial and legal advisors, undertook a review of the Company’s financial and strategic alternatives, including remaining a publicly held company. As part of that review, the Board conducted a comprehensive process in which it engaged with Saltchuk and approached and engaged with other potential transaction counterparties. Informed by its review and that process, the Board firmly believes Saltchuk’s increased offer represents compelling value to, and is in the best interest of, our shareholders not affiliated with Saltchuk.”
Douglas D. Wheat, Chairman of the Overseas Shipholding Group Board of Directors.
“We are excited to enter into this new chapter together with Saltchuk, which has been a significant shareholder of OSG over the past several years and has a close understanding of our business. Saltchuk’s operating companies have distinguished themselves in their respective segments, and this transaction partners us with an organization that shares our values and focus on customers. We are thrilled to soon join the Saltchuk family of companies.”
Sam Norton, OSG’s President and Chief Executive Officer.
“OSG, our nation’s leading domestic marine transporter of energy, has a strong cultural fit with Saltchuk and shares our commitment to operational safety, reliability, and environmental stewardship. On behalf of the Saltchuk organization, we look forward to welcoming more than 1,000 members of the OSG team to our family of companies and growing the enterprise through multi-generational investments.”
Mark Tabbutt, Chairman of Saltchuk Resources.
As part of Saltchuk’s family of diverse freight transportation, maritime service, and energy distribution businesses, OSG will function as an independent business unit when the transaction completes.
It is anticipated that the tender offer will close in the coming months, subject to customary closing conditions, which include the expiration of the Hart-Scott-Rodino Act waiting period and the tender of shares that together with the shares that Saltchuk already owns, represent at least a majority of OSG’s outstanding shares of Class A common stock. After the tender offer closes successfully, Saltchuk will immediately purchase all of the OSG shares that were not purchased during the tender offer through a second-step merger at the same price.
There are no financing requirements associated with this transaction. It will be financed using a combination of cash on hand and committed debt financing.
Fried, Frank, Harris, Shriver & Jacobson LLP is serving as Overseas Shipholding Group’s legal counsel, and Evercore is serving as the organization’s only financial advisor. Saltchuk is receiving legal and financial advice from K&L Gates LLP and BDT & MSD Partners, respectively.
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Image source: Overseas Shipholding Group.
