Two of shipping’s biggest names, Norway-based Frontline and Belgium’s Euronav NV, have agreed to merge in a move that would create one of the world’s biggest tanker owners.
The all-stock deal announced Thursday, which has been approved by both the companies’ boards, involves an exchange of 1.45 Frontline shares for each Euronav share. The exchange will result in Euronav shareholders owning 59% of the merged entity and Frontline investors controlling 41%.
The combination offers economies of scale that will facilitate increased fleet utilisation and ease a transition to digitalisation of logistics and the adoption of lower-carbon fuels for tankers, the companies said.
“The combination would be a leading global independent oil tanker operator,” KBC Securities wrote in a note to clients, while cautioning that there were no assurance yet that a definitive merger agreement will be reached.
The rise of Euronav’s share price on Thursday, and Frontline’s fall, reflected the planned exchange ratio of the two shares compared to Wednesday’s stock market closings, Arctic Securities analyst Lars Bastian Oestereng said.
“You can implicitly buy Frontline shares through buying Euronav shares cheaper …It’s an arbitrage opportunity,” he said.
The new firm would have a fleet of 146 tankers, including 69 very large crude carriers (VLCC) and 57 Suezmax vessels.
“I am very excited and give my full support and commitment to this combined platform,” veteran shipping investor JohnFredriksen said.
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