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Proposed merger for massive oil tanker company

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Frontline Ltd and Euronav NV of Belgium are set to merge and create one of the largest oil tanker companies in the world.

The parties have signed a term sheet – unanimously approved at board level – on a potential stock-for-stock combination between the two companies, based on an exchange ratio of 1.45 FRO shares for every EURN share resulting in Euronav and Frontline shareholders owning approximately 59 per cent and 41 per cent, respectively, of the combined group.

It is anticipated that Euronav will pay total dividends of up to 12 cents before the closing of the business combination with no impact on the exchange ratio.

If the deal completes, the combined group would continue under the name Frontline and would continue to operate from Belgium, Norway, Britain, Singapore, Greece and the US.

The companies said a combination would create a leading global independent oil tanker operator, with a market capitalisation of more than $4.2 billion based on market values of the respective companies as of April 6.

The combined tanker fleet would include 69 VLCC (very large crude carriers), 57 Suezmax vessels, and 20 LR2/Aframax vessels.

The combined group will be headed by Euronav CEO Hugo De Stoop as the chief executive officer.

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.

Billionaire shipping magnate John Fredriksen, the founder of Frontline and the holder of a significant stake in Euronav, 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.

“The new Frontline would be able to offer value enhancing services for our customers and increase fleet utilisation and revenues, which would benefit all stakeholders. I am very excited and give my full support and commitment to this combined platform.”

Lars H Barstad, CEO of Frontline, said: “Frontline believes this transaction would form a powerful combination at an exciting point in the cycle. The combination would create a strong platform to further enhance shareholder value for our investors.”

Carl Steen, chairman of Euronav, added: “A transaction between Frontline and Euronav is expected to deliver real value for both sets of shareholders. The financial strength of the combined group, with a strong leadership team, would make the combined entity well placed to maximise value throughout the tanker market cycle.”

Mr De Stoop said: “This transaction 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.”

The companies said a combination remained 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.

Frontline and Euronav said they were working diligently to agree on and finalise an appropriate transaction structure for the potential business combination.

They added that it was premature to guide the market on when such combination could be completed and there could be no assurance that a definitive agreement would be reached between the parties, and the consummation of any transaction was subject to several conditions as set forth above.

Frontline and Euronav are independent tanker companies engaged in the ocean transportation and storage of crude oil.

Frontline is incorporated in Bermuda and headquartered in Oslo, Norway, with commercial offices in London.

Euronav is headquartered in Antwerp, Belgium, and has offices throughout Europe and Asia.

Merger plans: Bermudian-based oil freight firm Frontline is set to merge with Euronav NV of Belgium (File photograph)
John Fredriksen, the founder of Frontline (File photograph)
Lars H Barstad, CEO of Frontline (File photograph)
Hugo De Stoop: to lead the combined group

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Published April 08, 2022 at 8:03 am (Updated April 08, 2022 at 8:03 am)

Proposed merger for massive oil tanker company

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