Star Bulk Carriers (NASDAQ:SBLK) and Eagle Bulk Shipping (NYSE:EGLE) have entered into an all-stock merger agreement, paving the way for the creation of a shipping powerhouse with a market capitalization of $2.1 billion. Upon completion of the transaction, Star Bulk shareholders will hold about 71% of the combined entity, while Eagle shareholders will own the remaining 29%.
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Under the terms of the deal, Eagle Bulk shareholders will receive 2.6211 shares of Star Bulk common stock for each Eagle’s share held. The transaction is expected to close in the first half of 2024, subject to approval from Eagle shareholders and relevant regulatory authorities.
Furthermore, the current Star Bulk CEO, Petros Pappas, will assume the role of CEO of the combined company. Additionally, Spyros Capralos, Chairman of Star Bulk, will serve as Chairman of the merged entity.
Benefits of the Deal
By joining forces, these companies will create a strong player in the U.S. dry bulk shipping market, owning a substantial fleet of 169 vessels. In addition to this, the increased size and liquidity from the merger are expected to reduce capital costs for the combined company.
Upon closing, the transaction is anticipated to produce at least $50 million in annual cost and revenue synergies within 12 to 18 months. These synergies are expected to be realized through the integration of commercial operations and achieving economies of scale, including lower general and administrative expenses.
Is Star Bulk a Good Buy?
Overall, Wall Street analysts have a Moderate Buy consensus rating on SBLK stock based on two Buys assigned in the past three months. Furthermore, the average price target of $23 per share implies 15.3% upside potential. Shares of the company are up 16.6% so far this year.
