The Belgian shipping company Euronav merges with its Norwegian competitor Frontline and becomes the largest oil tanker shipping company in the world. Hugo De Stoop, the CEO of Euronav, will lead the merged company.
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The combination of Euronav and Frontline, the shipping company of Norwegian shipping tycoon John Fredriksen, will create the largest oil tanker shipping company in the world with an enterprise value of more than $4.2 billion. The combined fleet consists of 69 large crude oil tankers (VLCCs) and 57 smaller Suexmax vessels.
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The deal is entirely in shares. Euronav’s shareholders will own approximately 59 percent of the new company. They will receive 1.45 Frontline shares per share. The merger will value Euronav at approximately $13.7 or €12.5 per share. That is an 18 percent premium to Wednesday’s closing price.
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This transaction could be an important development for the tanker industry.
Hugo De Stoop
CEO Euronav and future CEO of the merger group
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The Euronav name will disappear and the merged group will operate under the Frontline banner. Euronav CEO Hugo De Stoop will lead the business combination.
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The deal has not come out of the blue. The Norwegian oil magnate Fredriksen In October last year, through his privately controlled vehicle CK Limited, he offered $200 million for a 9.8 percent stake in Euronav, which he has gradually increased since then. The main shareholder of Frontline, one of Euronav’s biggest competitors, also became the largest shareholder of the Belgian shipping company, which was founded in 1995 by the Saverys family.
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Rumors
At the time, the deal sparked rumors of a possible merger of the two largest players in the market. For the time being, it is only an investment, said Euronav CEO Hugo De Stoop at the end of last year an interview with this newspaper† De Stoop immediately added that ‘he was always ready to discuss a possible merger with another player. “Fredriksen can call me, he has my number.”
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Frontline and Euronav have already had several talks to merge. So this time it worked. Both already work together in a charter pool, are both very active on the spot market and provide similar services. Together, Fronline and Euronav account for an estimated 8 to 10 percent of the world oil tanker market.
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The cultural difference is huge. Frontline is very small, it has about 30 employees, and outsources a lot to third parties. Euronav is strongly vertically integrated with its own ship management and invests heavily in research and development. De Stoop will have to reconcile the two corporate cultures.
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“This transaction could be an important development for the tanker industry,” De Stoop said in a statement. “She creates a leading shipping company that is better able to meet the needs of our customers, support our partners and drive sustainability initiatives to lead the energy transition.”
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The 78-year-old Fredriksen has a 38 percent stake in Frontline and has been thinking about his ‘legacy’ for some time, industry can be heard. For him, his strategy at Frontline has always worked well. The oil tanker business is his passion and he decides everything at the Norwegian shipping company. But neither of his two daughters is active in shipping. There was a risk that his model would collapse if he is no longer active there.
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CMB
In recent months, the shipping company CMB built up an interest of 13.22 percent in Euronav and was suddenly the largest again. shareholder of Euronav† Everyone wondered why the Saverys family invested again. CMB also indicated that it aspired to a seat on Euronav’s board of directors in order to play a more active role in Euronav’s strategic decisions and maximize the company’s shareholder value.
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The Saverys family’s comeback has benefited investors in Euronav. Since it was announced in mid-February that CMB again had an interest in Euronav, the share has appreciated by a fifth.
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