Braemar Shipping (BMS) and ACM Shipping (ACMG) are pooling their collective talents to take on London's highly competitive, but fragmented ship-broking market. The rationale for merging is compelling. Size matters in this industry and greater scale typically means fatter profits. It should put the new broking division in the hunt for larger, more lucrative contracts, too.
"We've spent an immense amount of time working on this," admits ACM chief executive Johnny Plumbe, who two years ago rebuffed a bid from Norwegian rival RS Platou. No wonder, management reckons the deal will be earnings accretive in the first financial year after completion, pencilled in for late July. And there's plenty in it for both sides. The ebullient Mr Plumbe has always wanted to expand the liquefied petroleum gas (LPG) team set up in 2008, while Braemar chief James Kidwell, who will run the new business, gets ACM's core tanker broking operation.
ACM's shareholders will get two shares in the new company plus 250p in cash for every five ACM shares held. Despite the £10m cash cost of the deal, the business will also retain a substantial cash pile and no debt.
