Two of Navios' NYSE-listed shipowning companies are set to merge, and their combination will create the largest shipping firm by vessel count on an American stock exchange.
Navios Maritime Partners and Navios Maritime Acquisition Corp. announced last week that they intend to merge. Shareholders of Navios Acquisition, a tanker owner, will receive about 0.13 shares of Navios Maritime Partners for each of their outstanding shares. A round of Navios Acquisition debt that was set to mature in November will be resolved in a cash payout from Navios Partners, with support from newly arranged loan financing for the combined entity. The transaction will help resolve Navios Acquisition's heavy burden of debt.
“We are announcing a transformative transaction. The combined entity will be the largest U.S. publicly-listed shipping company in terms of vessel count, with 15 vessel types diversified across three segments, servicing more than 10 end markets," said Angeliki Frangou. "About one-third of our fleet will be in each of the dry bulk, containership and tanker segment. We believe that this combination will result in a stronger, more resilient entity, mitigating sector specific cyclicality."
The combined firm will have 140 vessels with a combined deadweight of about 15 million tons and a total fleet value of about $4.2 billion. At present, it has a chartering backlog worth about $1.6 billion of contracted revenue. Given the relatively even split between dry bulk, wet bulk and boxship operations, Navios says that it will be able to operate at scale across all of the major segments and smooth out earnings fluctuations. It also provides investors with evenly-balanced exposure to the deep-sea shipping industry as a whole.
The merger is expected to create cost reductions, and the new firm will have a relatively low leverage ratio of about 35 percent. Navios Partners' executive board will be responsible for the combined firm's management. Frangou, who was already chairman and CEO of both firms, will retain the role in the merged entity.
Earlier this year, Navios consolidated its holding by merging its Nasdaq-listed Navios Maritime Containers entity into NYSE-lised Navios Maritime Partners. The combination folded Navios' container fleet into its dry bulk and general cargo entity.