Genco Shipping & Trading (NYSE:GNK) unanimously rejected an unsolicited $20.60-per-share cash acquisition proposal from its largest shareholder, Diana Shipping, setting the stage for a high-stakes standoff in the dry bulk sector.
The New York-based shipowner dismissed the offer as "materially" low and countered by suggesting it should be the acquirer instead.
The Genco board, following a six-week review, determined that Diana’s $876 million bid failed to account for Genco’s recent $347 million investment in modern Capesize and Newcastlemax vessels.
In a sharply worded letter, Genco leadership also questioned the "execution risk" of the deal, noting that Diana’s proposal relied on "highly confident" letters from lenders rather than fully committed financing.
Genco highlighted its industry-leading capital return profile as a primary reason for the rejection.
The company has paid 25 consecutive quarters of dividends, totaling $7.065 per share over the last six years—roughly 40% of its current share price.
With a pro forma net loan-to-value (LTV) of approximately 20% and a daily cash-flow breakeven of $10,000, Genco argued its financial health warrants a significantly higher valuation than the 15% premium offered by Diana.
Diana Shipping, which currently holds a 14.8% stake in Genco, expressed "deep disappointment" at the refusal to engage.
CEO Semiramis Paliou stated that the board is considering all options to advance its offer, which Diana claims represents a 23% premium over Genco’s 90-day volume-weighted average price.