Frontline has struck a deal with Euronav for a potential merger, in an all share offer that would value each Euronav share at around $12.09.
The two tanker companies signed a term sheet on April 7. They have now entered a definitive combination agreement.
The new company would be 55% owned by Euronav shareholders and 45% by Frontline. Frontline already owns an 18.8% stake in Euronav. For the deal to go ahead, it would require 50% plus one share in Euronav to agree.
The new company would be named Frontline and would be based in Cyprus, moving from Bermuda.
Euronav CEO Hugo De Stoop would be CEO of the combined company. John Fredriksen’s Hemen Holding, the largest shareholder in Frontline, will nominate two directors to the board. Euronav and Hemen would then identify two more directors jointly.
Frontline CEO Lars Barstad will join the board as a representative of Hemen. The latter owns a 48.4% stake in Frontline.
Frontline plans to launch the tender offer in the fourth quarter of the year. It will follow the offer with a formal merger.
Staking out the competition
Under the plan first set out in April, Euronav would have owned 59% of the company. It would also have been based in Belgium.
Another company is keen to acquire Euronav. Compagnie Maritime Belge (CMB) has proposed combining Euronav with one of its units, CMB.Tech. The unit focuses on hydrogen and ammonia. CMB’s plan would involve the sale of much of Euronav’s fleet and the use of the funds to develop CMB.Tech.
Following Frontline’s announcement in April, CMB built up its stake in Euronav to around 16.5%.
Frontline’s revised proposal, via tender offer, requires fewer shareholders to support the plan.
Speaking to the Financial Times in April, CMB’s Alexander Saverys said he had a number of options to halt Frontline’s plan. These include talks with other investors and a vision of a less oil dependent future for Euronav.