Belgian oil tanker company Euronav and its Norwegian counterpart Frontline have revealed plans to merge. If the combination materialises, the combined group would continue under the name Frontline and would continue to operate from Belgium, Norway, the UK, Singapore, Greece and the US.
The two companies have signed a term sheet on a potential stock-for-stock combination between the two companies. As the company will continue as Frontline, the name Euronav will cease to exist.
The combined group will be headed by Mr. Hugo De Stoop as the CEO, who is currently the CEO of Euronav. The Board of Directors of the combined group is expected to consist of seven members, including three current independent Euronav Supervisory Board members, two nominated by Hemen Holding Limited and two additional new independent directors. Frontline’s largest shareholder Hemen, and related companies owning shares in Euronav, have committed to support the potential transaction.
Market leader in the tanker market
Commenting on the possible combination, Mr. John Fredriksen says: ‘A combination of Frontline and Euronav would establish a market leader in the tanker market and position the combined group for continued shareholder value creation in addition to significant synergies. The new Frontline would be able to offer value enhancing services for our customers and increase fleet utilisation and revenues which would benefit all stakeholders.’
Frontline and Euronav feel that together, they will be better positioned to deal with rapid technological changes, including digitalisation and new “low carbon fuels” adoption, as it would be able to mobilise more resources and achieve meaningful scale to meet the challenges and opportunities from the energy transition.
USD 4.2 billion company
The merged company will be worth around USD 4.2 billion and will operate 69 very large crude carriers (VLCCs), 57 Suezmax vessels and twenty LR2/Aframax vessels.
A combination remains subject to agreement on a transaction structure, confirmatory due diligence, agreement on the terms and conditions of the potential combination agreement, applicable board, shareholder, customer, lender and/or regulatory approvals, employee consultations and other customary completion conditions.
The company cannot yet say whether the composite company will definitely be created or when this will be the case.
Picture by Euronav.