Evangelos Marinakis-led Capital Product Partners (CPLP) and US-based DSS Holdings, which owns Diamond S Shipping Group, have entered into a definitive transaction to combine their tanker fleets in a $1.65bn transaction, the latest chapter in the ongoing consolidation of the tanker sector.
CPLP has first agreed to spin off its crudetanker business, consisting of 25 vessels, and merge it with DSS, who own 43 vessels, to create Diamond S Shipping Inc. The merged company of 68 vessels will consist of 52 MR product tankers, 15 suezmaxes and a single aframax.
The companies said that Diamond S Shipping will be a market leader in the crude and product tanker markets, benefitting from a balanced and large-scale portfolio of vessels, strong management leadership and a cost-efficient commercial platform. The enlarged company will be listed on the New York Stock Exchange and headquartered in Greenwich, Connecticut.
Craig Stevenson, currently the CEO of DSS, will serve as the CEO of the new enlarged company.
CPLP will continue as a master limited partnership with its fleet of containerships and a dry bulk vessel, and will take a stake of around 33% in Diamond S Shipping while DSS takes the remaining 67%.
Gerasimos Kalogiratos, director and CEO of CPLP’s general partner Capital GP LLC, commented: “We are excited about this transaction, which marks a strategic step to drive value creation for our unitholders, as we expect the sum of the parts following this transaction to exceed the current equity valuation of CPLP.
“This transaction also enables CPLP to combine its tanker assets with DSS, a market leader that will be led by an accomplished management team with an excellent industry track record.”
VesselsValue puts a fair market valuation on the combined fleet at around $1.55bn.
Commenting on the news today, J Mintzmyer, lead researcher at US-based Value Investor’s Edge, told Splash: “First read, this looks like a very attractive deal for CPLP shareholders. The stock has long traded at a massive discount to NAV while the firm has not been given credit for their impressive containership backlog.”