The proposed tanker mega-merger between Frontline and Euronav is off.
Frontline plc (NYSE: FRO – OSE: FRO) announced after market close on Monday that it has terminated the combination agreement between Frontline and Euronav NV (NYSE: EURN).
The combination would have created the world’s largest publicly-listed oil tanker owner and operator with a market capitalization of more than $6 billion and 146 vessels, consisting of 68 VLCC, 56 Suezmaxes, 20 LR2/Aframax and 2 FSO vessels.
The two companies announced the definitive merger agreement in July, envisioning a stock-for-stock transaction with an exchange ratio of 1.45 Frontline shares for every 1 Euronav share, where Frontline would be the parent and Euronav a majority-controlled subsidiary.
However, the proposed deal ran into trouble with Euronav’s largest shareholder Compagnie Maritime Belge (CMB), controlled by the Saverys shipping family of Belgium, opposing the combination. The deal was supported by Norwegian billionaire John Fredriksen, who is Frontline’s largest shareholder and also a major shareholder in Euronav. Fredriksen stepped down from his role as Chairman and President at Frontline in May 2021.
Mr. Lars H. Barstad, CEO of Frontline commented:
“We regret that we could not complete the merger as envisaged in July 2022, as that would have created the by far largest publicly listed tanker company. At the same time, both companies have independently very large fleets of crude oil and product tankers, and are already enjoying economies of scale as evidenced by our respective recent financial reports.
“Frontline will with its efficient operations continue to capture value as this cycle unfolds, and remain focused on maximizing dividend capacity per share.”
Euronav had reaffirmed its commitment to the combination as recently as December 15, 2022.
Frontline’s stock surged more than 14% on the news in after hours trading. Shares of Euronav were down more than 18% in after hours.
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