Frontline and Euronav have agreed to merge in an all-stock deal with an aim to establish a major global independent oil tanker operator with a fleet of 146 vehicles and an expected market capitalisation of over $4bn.
Both the companies are involved in the ocean transportation and storage of crude oil.
Based in Norway, Frontline has an owned and operated fleet of 18 very large crude carriers (VLCCs), 29 Suezmaxes, and 20 LR2/Aframax tankers. The publicly-listed company is to add five more VLCCs, which are slated for delivery this year.
Euronav, which is based in Belgium, has an owned and operated fleet of two V-Plus vessels, 40 VLCCs, 24 Suezmaxes, and two floating storage and offloading (FSO) vessels.
The combined group will operate as Frontline with headquarters in Cyprus. Its operations will continue to be in Europe and Asia including Belgium, the UK, Norway, Greece, and Singapore.
The enlarged Frontline will have a fleet of 68 VLCCs, 56 Suezmaxes, 20 LR2/Aframax, and two FSO vessels. It will be listed on Euronext Brussels, the New York Stock Exchange (NYSE) and the Oslo Stock Exchange.
Frontline CEO Lars Barstad said: “Frontline believes this transaction will form a powerful combination at an exciting point in the cycle. We are amalgamating a strong operational, technical and commercial platform to enhance shareholder value.”
As per the terms of the deal, 1.45 of Frontline shares will be exchanged for each of the shares of Euronav. The deal has been approved unanimously by Frontline’s board of directors and by all members of the supervisory board of Euronav.
The exchange ratio gives a value of $12.09 per share for the Belgian oil tanker operator.
Existing Euronav’s shareholders will hold a stake of around 55% in the combined company, while existing Frontline shareholders will hold a stake of 45%.
Euronav CEO Hugo de Stoop said: “The proposed Combination is a huge opportunity to take a leading position in the tanker industry as we seek to master the transition to a world of clean, safe and sustainable shipping.
“This transaction represents a unique opportunity to deliver substantially better service to our customers, enhanced returns to our shareholders, and to provide a unique platform where people can fully express their talents while advancing our ambitious sustainability strategy towards decarbonisation of the shipping industry.”
