Taylor Maritime Investments (TMI) has announced that, on 25 August 2022, it submitted a non-binding indicative offer proposal to the board of directors of Grindrod Shipping Holdings Limited (Grindrod – www.grinshipping.com) to acquire all of the Nasdaq and Johannesburg Stock Exchange listed company for cash. Under the proposals, TMI would acquire all of the issued ordinary shares (excluding treasury shares) of Grindrod (other than the 26% holding already owned by TMI and its subsidiaries). At the time of writing, Grindrod’s shares are trading at US$23.93 per share. This is an increase of 16.7% on the undisturbed closing price on 25 August 2022, prior to the announcement. It is also lower than the US$26 per share that Grindrod shareholders will receive if the transaction proceeds, suggesting that the market is pricing in some uncertainty as to whether the transaction will go ahead as currently proposed. The proposed transaction values Grindrod at US$494m.
TMI says that its proposal represents an exciting opportunity to combine Grindrod’s operations with TMI to create a significant owner of Handysize up to Ultramax dry cargo ships. It believes that the complementary nature of the companies’ fleets and enhanced operational scale in the geared dry-bulk sector will create meaningful additional value for shareholders and customers that both companies serve.
TMI currently holds 4,925,023 Grindrod shares (representing approximately 26% of the 18,996,493 outstanding shares) through Good Falkirk (MI) Limited, a Marshall Islands company and wholly-owned subsidiary of TMI.
An all cash offer from TMI
TMI says that its proposed transaction is a takeover offer for cash, structured as a voluntary general offer governed by The Singapore Code on Take-overs and Mergers (the Code) and subject to the SEC Tender Offer Rules. The offer is for an aggregate value of US$26.00 per share, consisting of a cash purchase price of US$21.00 per share to be paid by TMI for each share tendered in conjunction with a special cash dividend from Grindrod of US$5.00 per share to its existing shareholders. This results in each non-TMI Grindrod shareholder receiving US$26.00 in value per share for each share tendered. If the transaction proceeds, TMI intends that it will be financed by a combination of some or all of the following: existing cash, debt and the special dividend from Grindrod referred to above.
The proposed transaction is subject to certain pre-conditions being satisfied or, subject to applicable law and regulation, being waived. This includes both the satisfactory completion of confirmatory due diligence and the finalisation of a mutually acceptable definitive legally binding agreement between TMI and Grindrod to bring about the proposed transaction. TMI says that the offer may also be subject to further conditions, as is customary for a transaction of this nature, including conditions as to the level of acceptances and any required merger control clearances, as well as the necessary regulatory approvals in all relevant jurisdictions. In addition, the transaction will also need the approval of TMI shareholders as required by the listing rules of the UK Financial Conduct Authority. Given all of the above, there can be no certainty that the proposals will actually proceed beyond the current stage. However, Evercore and Rand Merchant Bank, a division of FirstRand Bank Limited, have been appointed as financial advisers to TMI in respect of the proposed Transaction.