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Sunken oil tanker merger leaves CEO adrift

Container ships and oil tankers wait in the ocean outside the Port of Long Beach-Port of Los Angeles complex, amid the coronavirus disease (COVID-19) pandemic, in Los Angeles, California, U.S., April 7, 2021.

Posted on January 11, 2023

Promising to lock his main shareholder in a “gilded prison” may not have been the best way to win support for a controversial merger. So now Euronav (EUAV.BR) Chief Executive Hugo De Stoop will not head the $6 billion oil tanker empire that would have resulted from a deal with rival Frontline (FRO.OL). The slightly smaller suitor on Monday called off an all-share deal that dated back to last April, when the parties agreed to merge. Shares in Frontline jumped 25% on the cancellation news, while Euronav sank 15%.

Investors’ apparent surprise came even though Euronav’s main shareholder, family-controlled Compagnie Maritime Belge, increased its stake to more than 25%, with the apparent goal of crippling the deal. That’s odd because the terms looked increasingly favourable to Euronav shareholders: Frontline’s net asset value had jumped 43% between the deal’s announcement and December, against 21% for its Belgian target, Jefferies reckoned. De Stoop is now stuck running a smaller company than he had hoped, and with a large investor whose plans for its stake are unclear. The next question is how long they can both stay in the same boat.


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