A tanker mega merger is in the works. Frontline Ltd, (NYSE: FRO) and Euronav (NYSE: EURN) have signed a term sheet agreeing a potential stock-for-stock combination of the two companies. Based on an exchange ratio of 1.45 FRO shares for every EURN share, it would resulting in Euronav shareholders owning approximately 59% of the combined group and Frontline shareholders owning 41%.
If the deal goes through, the combined group would continue under the name Frontline and would continue to operate from Belgium, Norway, U.K., Singapore, Greece and the U.S. The combined group will be headed by Euronav CEO Hugo De Stoop as chief executive officer. The board of directors is expected to have seven members, including three current independent Euronav Supervisory Board members, two nominated by Hemen Holding Limited and two additional new independent directors.
The combined company would have a market capitalization of more than $4.2 billion based on market values of the respective companies as of April 6 and a fleet of 69 VLCC and 57 Suezmax vessels, and 20 LR2/Aframax vessels.
Hemen Holding Limited, which is indirectly controlled by trusts established by John Fredriksen for the benefit of his immediate family is Frontline’s largest shareholder Hemen,
“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,” Fredriksen said. “The new Frontline would be able to offer value enhancing services for our customers and increase fleet utilization and revenues which would benefit all stakeholders. I am very excited and give my full support and commitment to this combined platform”.
Carl Steen, Chairman of Euronav said: “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 maximize value throughout the tanker market cycle.”
Hugo De Stoop, CEO of Euronav 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.”