Grindrod Shipping, A Dry Bulk Shipping Owner, Acquires Two Ship Management Firms
On September 25th, Singapore shipowner Grindrod Shipping announced the acquisition of two ship management companies, expanding its shipping investment portfolio.
The Nasdaq-listed shipping company stated in a securities filing that it will acquire all issued shares of Taylor Maritime Investment's two ship management companies, Taylor Maritime Management Limited (TMML) and Tamar Ship Management Limited (Tamar).
Under the terms of the transaction, Grindrod Shipping's wholly-owned subsidiaries, Grindrod Shipping Pte. Ltd. and Island View Ship Management Pte. Ltd., will acquire all the shares of these companies for a total consideration of approximately $11.75 million. The consideration will be paid within two years after the completion of the acquisition, consisting of cash and newly issued shares. The number of shares issued as part of the consideration will be determined based on the volume-weighted average price on the Nasdaq and Johannesburg Stock Exchanges and will be subject to an additional premium of 7.5% within the three months prior to the signing of the purchase agreement.
It is worth noting that the total consideration for this acquisition will not exceed $13.5 million. Grindrod Shipping plans to finance the transaction through a combination of cash reserves and the issuance of new Grindrod Shipping common stock within two years after the completion of the transaction.
Grindrod Shipping revealed in the filing that the acquisition is expected to be completed before mid-October 2023, subject to completion conditions, including the repayment of the debts owed by the company and its subsidiaries to the seller.
Regarding the latest acquisition, Kurt Klemme, Chairman of Grindrod Shipping, said, "We are delighted to acquire these two ship management companies, whose current operations align with our ship management technical practices and business strategy. This acquisition will further increase the company's revenue from ship management and unlock synergies in our dry bulk fleet deployment. We will also achieve savings in technology through a larger fleet. By centrally managing the merged group fleet, the company will undoubtedly bring better returns to shareholders."
According to the shipping industry, the cooperation between Grindrod Shipping and TMI is part of an ongoing consolidation between the two companies. In October last year, TMI signed an acquisition agreement with Grindrod Shipping. Under the agreement, the proposed transaction structure is a voluntary comprehensive tender offer, including TMI paying $21 in cash per share and a special cash dividend of $5 per share to be distributed to existing shareholders of Grindrod Shipping.
Two months later, the two companies issued a joint statement stating that TMI had completed the tender offer for all issued common shares of Grindrod Shipping, increasing its ownership percentage to 83.23%. The merger is expected to create a medium-sized dry bulk shipping company. According to Clarkson data, the combined company currently owns 41 bulk carriers with a total capacity of 1,582,438 deadweight tons.
It is reported that TMML and Tamar involved in this transaction are the commercial and technical managers of most of TMI's portfolio of vessels, excluding Grindrod Group vessels. One key aspect of TMI's original investment in Grindrod was to expand its commercial footprint and achieve economies of scale when managing larger complementary fleets. Grindrod successfully consolidated the management of the two companies' fleets into one entity, making it more convenient to adjust fleet management strategies and pool fleet resources to create potential synergies in key areas such as technical management and commercial management.
