(Drybulk shipping report updated with detail on Genco Shipping, Eagle Bulk Shipping and Excel Martime Carriers.)

ATHENS, Greece ( TheStreet) -- DryShips ( DRYS) traded sharply lower amid heavy volume Monday after the shipping company announced it would acquire a dozen oil tankers from a Korean shipbuilder.
ARM Holdings

DryShips said it would buy the high-specification newbuilding oil tankers over the next three years for a price of around $770 million, including over $3 million per vessel in extra items.

>>DryShips Sets Rig Unit's Offering at $17.50

Six newbuilding Aframax tankers will be acquired by 2012; six Suezmax tankers will be acquired by 2013. Staggering the tanker deliveries will help DryShips take advantage of improving market conditions over the next few years, the company said.

The announcement was made on Thursday, the last trading before a three-day market holiday.

Investors reacted strongly Monday morning when trading resumed. DryShips shares plunged 7% to close at $5.55 on Monday. Nearly 28 million shares were in play at the closing bell, compared with their average daily trading volume of 22.4 million shares. The Guggenheim Shipping ETF ( SEA), an exchange-traded fund that counts DryShips and rival Diana Shipping ( DSX) as 5.1% of its total holdings, bid 0.4% lower to $27.83.

DryShips said it made initial payments of $120 million against the oil tanker contracts using cash on hand. It intends to finance the remaining capital commitments, including delivery installments of about 70% of each vessel's price, with cash and bank debt. DryShips also said it intends to position the tanker investments for a spinoff or initial public offering , likely in 2011.

"With OceanRig UDW's successful Norwegian offering, we have positioned OceanRig UDW to be a pure play in the ultra deepwater drilling sector with contracts and a balance sheet that is self-sustaining," said CEO George Economou.

DryShips said earlier this month its wholly-owned Ocean Rig UDW planned to raise $500 million in a private offering .

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