Posted on June 13, 2022
Frontline and famed investor John Fredriksen are continuing to increase the pressure to complete their proposed merger with Euronav by acquiring additional shares of the Belgian shipping company. Fredriksen’s plan to combine the two companies into one of the largest tanker owner-operators continues to face opposition from the Saverys family which is the largest shareholder of Euronav. Despite losing in their effort to elect a slate of opposition directors to the board of Euronav, the family is reportedly still working to defeat Frontline and instead pursue its proposal to merge Euronav with its CMB.Tech company.
The Fredriksen side tipped its hand in the ongoing merger negotiations last month saying that the finalized structure for the transaction might include, “a voluntary exchange offer from Frontline for Euronav shares as a first step and Frontline would then consider setting the minimum requirement for the acceptance rate as low as 50.1 percent, including shares already owned by Frontline.” Some analysts had suggested that Euronav would require a super-majority of as much as 75 percent to obtain approval for the merger from shareholders.
Frontline announced today for the second time in two weeks it has agreed to acquire in privately negotiated transactions additional shares of Euronav. The share acquisition is being completed in the form of an exchange for shares of Frontline. They will acquire an additional 7.7 million shares from certain Euronav shareholders representing just over 3.8 percent of the shares outstanding in Euronav. At the end of May, Frontline reported its first exchange deal acquiring 5.96 million shares representing 2.95 percent of the outstanding shares of Euronav.
Following the completion of the latest share exchange agreement, which is expected to close by June 14, Fredriksen, directly and indirectly, will control nearly 18.8 percent of the shares outstanding of Euronav. The Saverys family shortly after the merger discussions were made public also increased their position in Euronav to 19.6 percent of the shares outstanding.
The two companies are yet to reach final terms for the structure of the transaction and post-merger operations. At the end of May, Frontline said the companies “have identified significant operational and administrative synergies, and many of these can be addressed in parallel with the steps towards a full business combination.”
The discussions for the merger were announced at the beginning of April and combined they would become what the companies described as “a leading global independent oil tanker operator.” The merged operations would have the largest VLCC and Suezmax fleet. Addressing the market opportunities, Frontline recently said that “positive volatility has returned to the tanker market” in what it believes is the early phase of a cyclical recovery for the industry coinciding with a historically low orderbook. They contend that the merged company would be well positioned to benefit from the current market trends.