Two of the largest names in tanker shipping announced their merger, as Euronav and Frontline signed a term sheet that has been unanimously approved by both boards on a potential stock-for-stock combination between the two companies.
The deal is based on an exchange ratio of 1.45 FRO shares for every EURN share resulting in Euronav and Frontline shareholders owning approximately 59% and 41%, respectively, of the combined group.
If the combination materializes, the combined group would continue under the name Frontline and would continue to operate from Belgium, Norway, UK, Singapore, Greece and the US.
The combined group will be headed by Hugo De Stoop as the Chief Executive Officer and the Board of Directors of the combined group is expected to consist of seven members, including three current independent Euronav Supervisory Board members, two nominated by Hemen Holding Limited and two additional new independent directors. Frontline’s largest shareholder Hemen, and related companies owning shares in Euronav, have committed to support the potential transaction.
The merger would create a global independent oil tanker operator, with:
- A market capitalization of more than USD 4.2 billion based on market values of the respective companies as of 6 April 2022;
- Tanker market participation with 69 VLCC and 57 Suezmax vessels, and 20 LR2/Aframax vessels;
- Significant synergies related to SG&A and other savings expected to be extracted from the combined entity;
- Sustainable shipping, aiming for the highest ESG standards in the industry.
Additionally, in view of rapid technological changes, including digitalization and new “low carbon fuels” adoption, the combined group would be able to mobilise more resources and meet these challenges and opportunities from the energy transition.
Commenting on the possible combination, John Fredriksen said:
A combination of Frontline and Euronav would establish a market leader in the tanker market and position the combined group for continued shareholder value creation in addition to significant synergies
Moreover, Mr. De Stoop added that this merger “would mark an exciting development for the tanker industry, creating a leading tanker company which would be positioned to serve the needs of customers, support partners and drive technology and sustainability initiatives to lead the energy transition.”
A combination remains subject to agreement on a transaction structure, confirmatory due diligence, agreement on the terms and conditions of the potential combination agreement, applicable board, shareholder, customer, lender and/or regulatory approvals, employee consultations and other customary completion conditions.
