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Top Ships: Possible Merger With Scorpio Tankers?

|Includes: STNG, TOP Ships Inc. (TOPS)
Summary

Top Ships and Scorpio Tankers have the same ECO VESSEL STRATEGY.

Both Top Ships and Scorpio Tankers have headquarters in Monaco.

Scorpio Tankers struck a $1.1bn deal last May to merge with Oslo-listed Navig8, taking over a 27-ship fleet.

Top Ships and Scorpio Tankers have the same lenders

Shipping mergers & acquisitions in 2018

Following a wave of an unprecedented number liner consolidations over the past number of years, there have been indications that this trend of mergers is likely to persist in the shipping industry in 2018.

A recent Moody’s report says shipping companies who fail to participate in alliances and engage in slot purchase agreements will lack the cost-efficiency required to be competitive enough. This will probably result in a disadvantage, with the exception of regional firms with a focus on a specific market area and not compete on the main trade lanes.

Scorpio Tankers is a leading international provider in the transportation of refined petroleum products.On a fully delivered basis, Scorpio Tankers will own 109 product tankers (38 LR2, 12 LR1, 45 MR, and 14 Handymax tankers).

Scorpio Tankers is looking to acquire medium tanker companies over the whole world.  Scorpio Tankers struck a $1.1bn deal last May to merge with Oslo-listed Navig8, taking over a 27-ship fleet.

If this merger happens it would be beneficial for both TOPS SHIPS and SCORPIO TANKERS.

Benefits of the Merger, Upon Completion

• Scorpio would be the largest owner of product tankers listed on a U.S. securities exchange, with a fully delivered fleet of 119 vessels 

• The size of the combined company provides it with substantial economies of scale:

  • Significant presence across adjacent product tanker segments will provide for enhanced customer relationships and increased vessel utilization.

  • Commercial and operating costs will benefit from scale efficiencies.

  • The availability, terms, and quality of financing will provide significant advantages compared to its peers.

• Going forward, the combined company’s capitalization, quality fleet, and the commercial and technical platform of its manager make it well-positioned to capitalize on further consolidation opportunities.