Star Bulk Gears Up for Eagle Bulk Acquisition
The global bulk shipping industry is set to witness the creation of one of the biggest commodities carriers with the anticipated completion of the acquisition of U.S.-based Eagle Bulk Shipping by Greek shipping giant Star Bulk Carriers on April 9.
The two companies first announced plans for the acquisition in December last year, a deal that is expected to create a bulk carrier behemoth with a market capitalization of $2.1 billion. Eagle Bulk has now announced that its shareholders have voted to approve the deal that will culminate in the creation of a global leader in dry bulk shipping.
Prior to the acquisition, the two shipping companies already operated strong businesses across the bulk segment. Founded in 2006, Star Bulk Carriers boasted of $2.5 billion in market capitalization and revenues of $1.4 billion in 2022. The company operated a fleet of 117 vessels with an aggregate capacity of 13 million dwt.
Eagle Bulk Shipping was on its part founded in 2005 and has been focusing on midsize dry bulk vessel operations. In 2022, its revenues stood at $720 million while its market capitalization is valued at $535 million.
With the acquisition, which Eagle Bulk announced will be complete on or about April 9, subject to the satisfaction of the remaining closing conditions, the bulk shipping industry now sees the creation of an entity that will be the largest U.S.-listed dry bulk shipping company.
This comes after Star Bulk agreed to pay $52.60 per share to Eagle’s shareholders, including a 17 percent premium based on Eagle’s closing share price of $44.85 on December 8, 2023. Upon the close of the transaction, Star Bulk and Eagle shareholders will own approximately 71 percent and 29 percent of the combined company.
The new entity, which will operate as Star Bulk Carriers and will be headquartered in Athens, Greece, will have a combined fleet of 169 owned-vessels on a fully delivered basis, 97 percent of which are fitted with scrubbers. The vessels range from Newcastlemax/Capesize to Supramax/Ultramax.
The combined entity is also expected to have combined liquidity of nearly $420 million, as of September 30, last year with the transaction in line to generate at least $50 million in annual cost and revenue synergies through commercial operations integration and economies of scale within 12-18 months. With increased size and liquidity, the combined company also expects to reduce its cost of capital.
After the acquisition, Petros Pappas will continue as Star Bulk's CEO and Spyros Capralos will remain as chairman. Eagle will nominate one board member.
“Bringing together Star Bulk and Eagle will create a global leader in dry bulk shipping with a large, diversified, scrubber-fitted fleet. Together we will benefit from greater scale with 169 owned vessels, generating meaningful synergies and building an even stronger financial profile,” said Pappas in December last year.
The company intends to continue investing in emission reduction technologies as it pursues growth over the long term.