Stelmar rejects takeover bid

NEW YORK (Reuters) – Stelmar Shipping Ltd., a major transporter of crude oil and petroleum products, said yesterday its board of directors determined a takeover proposal from OMI Corp. was not in the best interest of Stelmar shareholders and declined to enter talks. Chairman Nicholas Hartley, in a letter to OMI, said the Athens-based shipping company can better boost earnings and its stock price through the expansion of its shipping fleet. Stelmar will take on five new vessels this year, boosting its tanker fleet to 41, assuming no disposals. OMI, a Stamford, Connecticut-based shipper with 37 oil and product tankers, announced on May 17 that it was in talks with Stelmar to negotiate an acquisition for an undisclosed amount. However Stelmar’s management contended it had not received any offer and had not entered into merger talks with OMI. On May 25, OMI announced it offered to pay 3.1 shares for each Stelmar share, though shareholders could elect to receive up to 25 percent of the purchase price in cash. Based on its closing price Friday, OMI’s offer is worth $34.72 per Stelmar share, or a total of about $604 million. Stelmar hired Morgan Stanley and Jefferies & Co. to help it evaluate the bid, though it also amended its bylaws to eliminate the right of shareholders to call a special meeting. Yet Stelmar founder Stelios Haji-Ioannou, who together with his family controls 27 percent of Stelmar’s shares, told Reuters he supported the offer and urged the company to move quickly. OMI, frustrated by Stelmar’s response to its offer, last week said its offer would expire on June 9. Stelmar shares, up 34 percent since OMI announced its offer, closed at $32.10 on the NYSE Friday.