Hafnia’s acquisition offer undervalues Ardmore Shipping


Ardmore Shipping (Ardmore) issued a press release on 6 July 2020 suggesting that Hafnia Limited (Hafnia) had approached it with an unsolicited acquisition offer on 19 June 2020. In an all-stock transaction, Hafnia planned to offer 2.4 shares of Hafnia for one share of Ardmore. This would translate into an implied price of USD 3.87 per share as per Ardmore. Ardmore has rejected the acquisition proposal, highlighting that the proposal substantially undervalued the company and was opportunistic. Using NAV valuation methodology, we believe Hafnia’s offer significantly undervalues Ardmore.

Potential synergy from a bigger fleet
Currently, Hafnia is the second-largest owner of global product tanker fleet and the company’s fleet size would have increased to 110 vessels (from 85 vessels currently), had this acquisition gone through. A bigger fleet size may offer cost advantages with economies of scale and increased geographical diversification. Ardmore’s fleet has a slightly lower average age of 6.8 years compared to an average age of 7.5 years for Hafnia fleet. Furthermore, Hafnia has indicated that it expects a synergy of USD 15-20mn per year after this acquisition.
Source: Drewry



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