20th May 2014 14:53
LONDON (Alliance News) - Braemar Shipping Services PLC and ACM Shipping PLC Tuesday said they have agreed to merge to create a combined ship-broking business worth GBP167 million.
The deal will see Braemar shareholders take a 72% stake in the new entity and ACM shareholders 28%. Each ACM shareholder will receive two new shares of the new entity and 250 pence cash for every five ACM shares.
AIM-list ACM currently has a market value of around GBP50 million, but the acquisition price values it at GBP55 million. Braemar's market capitalisation is GBP112 million and trades on the London main market.
"The merger with Braemar provides a unique opportunity to create a global, diversified shipping services group, with a significant combined ship-broking division which we expect will be a strong engine for future earnings growth," said Braemer Shipping in a statement.
It said that the merger is expected to deliver earnings per share enhancement in the first full financial year following the completion of the merger and will have a strong balance sheet and cashflow generation.
The enlarged group will comprise more than 1,000 employees in Europe, Asia Pacific, the Americas, Africa and the Middle East. The merged ship-broking business will have more than 440 brokers worldwide.
The merger requires the approval of both companies shareholders, as well as court approval for the sanction of the scheme, which it said it expects to be completed by late July.
In a separate statement Tuesday, Braemar Shipping Services also released its results for the year ended February 28, recording a drop in both profits and revenue.
Braemar Group is a provider of broking, consultancy, technical, logistics and other services to the shipping, marine and energy industries.
Braemar reported pretax profit of GBP9.0 million for the year, down from GBP9.6 million a year earlier, as revenues fell to GBP125.5 million, from GBP139.7 million the prior year, on the back of weaker revenues form its ship-broking division.
However, adjusting for the revenue generated by the RENA Project in the prior year, which significantly boosted revenue from its environmental division, the underlying growth in revenue was 4% in the year.
The group maintained its dividend for the year at 26.0 pence per share.
"The ship-broking business had a demanding year but we believe the industry has now passed the bottom of the cycle. The merger with ACM will create a strong platform for growth in this sector. It provides us with a unique and exciting opportunity to expand our ship-broking business in step with the growth of our shipping and technical services businesses," said Braemer Chief Executive James Kidwell in a statement.
Braemar Shipping Services shares were down 5.00% at 513.00 pence Tuesday afternoon, while ACM Shipping shares were trading 2.6% higher at 254.00 pence.
By Rowena Harris-Doughty; [email protected]; @rharrisdoughty
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