Posted on December 7, 2022
Belgium’s Saverys family and their shipping company Compagnie Maritime Belge resumed buying shares of tanker operator Euronav in signs of a continuation of the struggle with John Fredriksen’s Frontline for control of the company. Possibly linked to the renewed strength in the tanker market and analyst predictions of the beginning of upcycle for tankers, and shortly before Frontline is due to launch its share exchange offer, CMB recorded its first new purchases of Euronav shares in nearly two months.
In filings with the U.S. Securities and Exchange Commission, CMB reported two batches of share purchases in early December. After having been stable at just under 44 million shares of Euronav, they are reporting increasing their total position by an additional 4.6 million shares. CMB says it now owns nearly 48.4 million shares having invested an additional estimated $90 million into Euronav’s shares.
CMB’s total position has reached nearly 24 percent of the shares outstanding of Euronav. This is an increase from 13.9 million shares in February when they controlled just 6.9 percent. The first large increase came by April when they reached 33 million shares and then by July when they topped 40 million shares.
In a July filing with the SEC, the Saverys detailed their opposition to the proposed combination. They said they did not believe the companies needed to combine to enhance their operational efficiency or to archive their sustainability goals. They questioned the ability of the combined company to achieve more pricing power. Comments on the proposed structure of the deal, they said “CMB believes that by maintaining the present course, the proposed bid could create a very complex corporate structure that risks creating negative value.” The family had presented its plan for the operations of Euronav but failed in an attempt at electing an opposition slate of directors.
The tanker industry is changing rapidly with the latest impact being the EU’s Russian import ban and price caps which had now gone into effect. Last week Frontline’s Chief Executive Officer Lars Barstad told investors, “The market is virtually firing on all cylinders,” predicting the beginning of a prolonged upcycle.
Stock market analysts at Jefferies agreed raising their ratings, estimates, and price targets for the tanker companies they follow. They cited improvements in earning power for the sector as well as the anticipated impact of the EU moves against Russian oil. Jefferies has a buy rating on Euronav’s stock.
The exchange offer from Frontline for the combination of the companies is expected to start shortly setting the potential final battle for control of the tanker company. Frontline has said it would conduct the exchange and then seek to force out any remaining shareholders, but if the Saverys and their supporters can block Euronav from getting 75 percent shareholder consent they could prevent a merger.