Posted on January 11, 2023
The wedding is off. John Fredriksen controlled tanker giant Frontline plc is no longer to pursue the tanker mega merger with Antwerp-headquartered Euronav NV first announced back in April last year.
The deal would have created what would have been by far the world’s largest publicly listed tanker company.
From the get go, though, the proposed merger ran into sustained opposition from Euronav’s largest shareholder, the Saverys family’s CMB. “This is not a merger, but an acquisition by Vikings,” said CMB CEO Alexander Saverys.
By December 15, 2022, CMB and the Saverys had built up a stake in Euronav sufficient to block the take-over under Belgium law, meaning that, if the combination proceeded, Euronav would remain a separate legal entity with a separate listing on Euronext Brussels and the New York Stock Exchange.
In a letter to the Euronav board, Alexander Saverys wrote, “We hereby invite you to terminate the Combination Agreement. The aim of the Combination Agreement, a legal merger of Euronav and Frontline, cannot be realized without 75% shareholder support. As we control more than 25% of the voting rights and oppose the merger, the merger has become unachievable. Your fall-back scenario, whereby Frontline would control more than 50% of Euronav without being able to effect a full merger, is in our view effectively unworkable and value-destructive for all parties involved.”
Euronav’s response, issued on December 15, was to say it remained committed to the merger and that, while, under Belgian law, “a minority shareholding of more than 25% could potentially be used to seek to block a full merger, it cannot block an operational combination between two companies.”
Be all that as it may, Frontline today issued this statement:
Frontline plc (“Frontline”) (NYSE: FRO – OSE: FRO), formerly Frontline Ltd., refers to its announcement on July 11, 2022 regarding the combination between Frontline and Euronav NV (NYSE: EURN)”) and subsequent updates, and announces that it no longer pursues a combination between Frontline and Euronav. Frontline has terminated the combination agreement it entered into with Euronav in this respect.
As a result, Frontline will not make a voluntary conditional exchange offer for all outstanding Euronav shares. Frontline will also no longer seek a listing on Euronext Brussels. Frontline has simultaneously with this notice published a separate notice withdrawing its intention to such voluntary conditional exchange offer.
Mr. Lars H. Barstad, CEO of Frontline said: “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.