Overseas Shipholding Group Enters Into a Definitive Agreement to Be Acquired by Saltchuk Resources, Inc.
Overseas Shipholding Group (NYSE: OSG) announced a definitive merger agreement with Saltchuk Resources, valuing OSG at $950 million. Saltchuk will acquire all outstanding OSG shares for $8.50 per share, a 61% premium to OSG’s 30-day volume-weighted average price on January 26, 2024. The transaction has been unanimously approved by the boards of both companies and is expected to close in the coming months, pending customary conditions. Post-merger, OSG will operate as a standalone business unit within Saltchuk. The transaction is not subject to financing conditions.
- Purchase price of $8.50 per share represents a 61% premium.
- Transaction values OSG at $950 million.
- Agreement unanimously approved by both boards.
- OSG to operate as a standalone unit within Saltchuk.
- Transaction not subject to financing conditions.
- Saltchuk has a strong understanding of OSG’s business.
- Financial and legal costs associated with the merger.
- Dependence on regulatory approval and customary conditions.
- Potential integration challenges post-acquisition.
- Shareholder value contingent on the smooth execution of the merger.
Insights
The acquisition of Overseas Shipholding Group (OSG) by Saltchuk Resources for a cash transaction value of
From a financial perspective, OSG shareholders are benefiting from a substantial premium which could lead to positive market sentiment. The premium being offered is significantly higher than the initial indication price, possibly due to strategic negotiations and the intrinsic value seen in OSG's assets and operations.
Investors should note that the transaction is contingent on customary closing conditions, including regulatory approvals. However, given the absence of a financing condition, the risk of the deal failing due to funding issues is minimized. The acquisition, once completed, could lead to increased market competitiveness and operational efficiencies for Saltchuk.
In the short term, OSG's stock price is likely to align closely with the offer price, providing a clear exit point for existing shareholders. Long term, the integration of OSG into Saltchuk’s operations could unlock further value through synergies and expanded service offerings.
The acquisition deal between OSG and Saltchuk involves several legalities including the tender offer and compliance with the Hart-Scott-Rodino Act. This U.S. antitrust law requires large companies to file pre-merger notifications to the Federal Trade Commission and the Department of Justice to review the transaction for any potential antitrust issues. Given Saltchuk’s existing significant shareholding in OSG, this regulatory scrutiny ensures market competitiveness is maintained.
The deal structure involves a tender offer for all outstanding shares, followed by a second-step merger. This approach is often used to expedite the acquisition process and ensure full ownership transition. The legal advisors for both sides play a important role in ensuring all fiduciary duties are met, especially in light of the substantial premiums being awarded to OSG shareholders.
OSG's board, by conducting a comprehensive review and engaging with multiple potential buyers, has acted in the best interest of its shareholders, potentially reducing the risk of legal disputes over the agreed purchase price.
Retail investors should understand the impact of these legal aspects as they provide assurance of a well-structured and legally compliant transaction, reducing potential future litigations which could affect stock performance.
Purchase Price of
Transaction Valued at
Under the terms of the agreement, which has been unanimously approved by the Board of Directors of both companies, Saltchuk will commence a tender offer to acquire all outstanding shares of OSG it does not already own for
“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,” said Douglas D. Wheat, Chairman of the OSG Board of Directors. “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.”
“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,” said Sam Norton, OSG’s President and Chief Executive Officer. “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.”
Mark Tabbutt, Chairman of Saltchuk Resources, said: “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.”
Following the close of the transaction, OSG will operate as a standalone business unit within Saltchuk, becoming a member of its family of diversified freight transportation, marine service, and energy distribution companies.
The closing of the tender offer will be subject to customary closing conditions, including the expiration of the Hart-Scott-Rodino Act waiting period and the tender of shares representing, together with the shares already owned by Saltchuk, at least a majority of OSG’s outstanding shares of Class A common stock, and is expected to close in the next few months. Promptly following the successful completion of the tender offer, Saltchuk will acquire all remaining OSG shares not purchased in the tender offer through a second-step merger at the same price.
The transaction is not subject to a financing condition. It will be funded through a combination of committed debt financing and cash on hand.
Evercore is acting as exclusive financial advisor to OSG and Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal advisor to OSG. K&L Gates LLP is acting as legal advisor to Saltchuk and BDT & MSD Partners is acting as Saltchuk’s financial advisor.
About Saltchuk Resources, Inc.
Saltchuk is a privately owned family of diversified freight transportation, marine service, and energy distribution companies, with consolidated annual revenue of approximately
About Overseas Shipholding Group, Inc.
Overseas Shipholding Group, Inc. (NYSE: OSG) is a publicly traded company providing liquid bulk transportation services for crude oil and petroleum products in the
OSG is committed to setting high standards of excellence for its quality, safety and environmental programs. OSG is recognized as one of the world’s most customer-focused marine transportation companies and is headquartered in
Cautionary Notice Regarding Forward-Looking Statements
Statements contained in this communication regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “estimates,” “expects,” “focused,” “continuing to,” “seeking,” “will” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. These statements include those related to: the ability of the Company and Saltchuk to complete the transactions contemplated by the merger agreement, including the parties’ ability to satisfy the conditions to the consummation of the tender offer contemplated thereby and the other conditions set forth in the merger agreement. Because such statements deal with future events and are based on the Company’s and Saltchuk’s current expectations, they are subject to various risks and uncertainties, and actual results could differ materially from those described in or implied by the statements in this communication. These forward-looking statements are subject to risks and uncertainties, including, without limitation, risks and uncertainties associated with: the timing of the tender offer and the subsequent merger; uncertainties as to how many shares of the Company will be tendered into the tender offer; the risk that competing offers or acquisition proposals will be made; the possibility that various conditions to the consummation of the tender offer and the subsequent merger may not be satisfied or waived; the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement and other risks and uncertainties affecting the Company, including those discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) on March 11, 2024, as amended by a filing with the SEC on March 25, 2024, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings and reports that the Company makes from time to time with the SEC. Except as may be required by law, neither the Company nor Saltchuk assumes any obligation to update these forward-looking statements, which speak only as of the date they are made, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
Additional Information and Where to Find It
The tender offer for the outstanding shares of Class A common stock of the Company referenced in this communication has not yet commenced. This communication is for informational purposes only, is not a recommendation and is neither an offer to purchase nor a solicitation of an offer to sell shares of the Company or any other securities. This communication is also not a substitute for the tender offer materials that Saltchuk will file with the SEC upon commencement of the tender offer. At the time the tender offer is commenced, Saltchuk will file with the SEC a Tender Offer Statement on Schedule TO, and the Company will file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9.
THE COMPANY’S SHAREHOLDERS ARE URGED TO READ THE TENDER OFFER STATEMENT (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS), THE SOLICITATION / RECOMMENDATION STATEMENT AND ALL OTHER FILINGS MADE BY THE COMPANY AND SALTCHUK WITH THE SEC in CONNECTION WITH THE TENDER OFFER WHEN SUCH DOCUMENTS BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER.
When filed, the Company’s stockholders and other investors can obtain the Tender Offer Statement, the Solicitation/Recommendation Statement and other filed documents for free at the SEC’s website at www.sec.gov. Copies of the documents filed with the SEC by the Company and Saltchuk will be available free of charge under “SEC Filings” on the Investors page of the Company’s website, www.osg.com. In addition, the Company’s stockholders may obtain free copies of the tender offer materials by contacting the information agent for the tender offer that will be named in the Offer to Purchase included in the Tender Offer Statement.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240520180642/en/
Susan Allan, Overseas Shipholding Group, Inc.
(813) 209-0620
sallan@osg.com
Source: Overseas Shipholding Group, Inc.
FAQ
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