A Singapore-based shipping powerhouse is continuing its pursuit of Stamford-based Dorian LPG, as it aims to close what would be one of the industry’s most significant deals of recent years.

In the past month and a half, BW LPG has made several billion-dollar offers for Dorian, which specializes in transporting liquefied petroleum gas. While BW officials have argued both companies would benefit from combining their fleets, their proposed terms so far have not convinced Dorian executives as they assess their firm’s position in a competitive industry with improving prospects.

Multiple bids

BW LPG announced May 29 its plan to combine with Dorian in an all-stock deal worth $1.1 billion to create a company with 73 vessels. On its own, Dorian owns and operates 22 very-large gas carriers, according to its website.

“Combining Dorian’s high-quality fleet and operating platform with BW LPG’s vessels and expertise would create a larger combined fleet with better geographical coverage to drive value for our customers,” BW LPG CEO Martin Ackermann said in a statement. “Our proposal also provides Dorian shareholders with the opportunity to benefit from ownership of a larger company with enhanced trading liquidity that is better positioned for long-term growth and success.”

But the plan did not convince Dorian officials, who announced June 15 their rejection of the offer.

“Our board, whose members are beneficial owners of more than 25 percent of our outstanding shares, has unanimously concluded that BW LPG’s proposal undervalues Dorian and is not in the best interests of Dorian and its shareholders,” the company said in the statement.

BW made another statement June 26 to reiterate its plan. The firm again asserted that Dorian would benefit from joining a combined company possessing a “modern and cost-efficient fleet,” with improved cash flow and access to capital markets and a greater ability to attract investor attention and gain shareholders.

“Since we publicly disclosed our proposal to combine with Dorian, we have engaged with a significant percentage of Dorian’s shareholder base, and their response to the proposed transaction has been overwhelmingly positive,” Ackermann and BW board Chairman Andreas Sohmen-Pao said in an open letter. “For this reason, we are disappointed that all our attempts to engage with management and their advisers have been declined.”

In a responding statement, Dorian President, CEO and Chairman John Hadjipateras disputed Sohmen-Pao and Ackermann’s account of the companies’ interactions. But he also held out the possibility of the companies finding common ground

“Contrary to BW LPG’s assertion, we have not declined to engage with BW LPG,” Hadjipateras said. “Rather, we have offered to meet with BW LPG to discuss an acquisition of BW LPG’s ECO-ships, to no avail. Our board is always open to opportunities that would enhance value for our shareholders and we are in regular communication with them.”

On Monday, BW lodged its latest bid — one that would give Dorian shareholders 2.12 BW shares for each Dorian share. BW also said it planned to run independent candidates this year for seats on Dorian’s board of directors.

Dorian officials said they would consider the new proposal.

Since BW made its first bid, Dorian’s stock price has stayed relatively consistent. It closed Thursday at $7.82, compared with a 52-week high of $8.79.

Optimistic outlook

Amid the interest from BW, Dorian officials said they remain bullish about their company’s long-term trajectory.

For the year ending March 31, Dorian saw its revenues dip nearly 5 percent, to about $159 million. The company’s results reflected lower fleet usage during the first three months of 2018.

But Hadjipateras said Dorian’s very-large gas carriers’ prospects could be boosted by incoming regulations to reduce ships’ sulfur emissions, as the company works to improve its vessels ahead of the 2020 implementation of the new rules.

“We continue to strengthen our balance sheet without decreasing our exposure to a potential market recovery,” Hadjipateras said in a statement. “In the near term, we remain cautiously optimistic about the outlook for the LPG tanker sector as industry fundamentals improve.”

In 2018, demand in the three main segments of the global shipping industry — dry bulk, tankers and containers — would outstrip supply for the first time in several years, according to a report released in February by credit-ratings agency S&P Global Ratings.

“Given the fundamental improvement in supply conditions, as signified by ship order books being at close to all-time lows, we think recovery in shipping rates could continue beyond 2018,” the report said. “However, we see a risk that vessel owners, renowned in the industry for their historically poor supply discipline, could embark on an ordering spree in anticipation of better times ahead.”

pschott@scni.com; 203-964-2236; Twitter: @paulschott