Euronav Frontline tie-up to capitalise on sustainable shipping opportunities

Norwegian tanker owner and operator Frontline and its Belgium-based counterpart Euronav have entered into a definitive agreement to create a global independent tanker operator.

Euronav
Illustration. Courtesy of Euronav

The combination will create a tanker operator with an anticipated market capitalisation of more than $4 billion based on market values of the respective companies as of 8 July 2022, adjusted for the shares in Euronav currently held by Frontline.

What is more, it will have a combined fleet of 146 vessels comprising 68 VLCCs, 56 Suezmaxes, 20 LR2/Aframaxes and 2 FSO units.

As explained, the combined group will now have “the management, capabilities, resources and scale to successfully capitalise on the opportunities presented by the new era in the sustainable shipping industry.

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With its complementary platforms, financial strength and skills, the combined group will be well placed to provide clean and sustainable oil shipping solutions in a highly competitive environment, the duo said.

Both entities have set ambitious decarbonisation targets that will be further enhanced through this combination.

In view of rapid technological changes, including digitalisation and new “low carbon fuels” adoption, the combined group will be able to mobilise more resources and achieve meaningful scale to meet these challenges and opportunities from the energy transition.

“This transaction … will position the combined group for continued, sustainable shareholder value creation and the realisation of significant synergies. Frontline, with a fleet of 146 vessels, will be able to offer value enhancing services for our customers and increase fleet utilisation and revenues which will benefit all stakeholders,” John Fredriksen, CEO of Frontline, commented.

“The proposed combination is a huge opportunity to take a leading position in the tanker industry as we seek to master the transition to a world of clean, safe and sustainable shipping. This transaction represents a unique opportunity to deliver substantially better service to our customers, enhanced returns to our shareholders, and to provide a unique platform where people can fully express their talents while advancing our ambitious sustainability strategy towards decarbonisation of the shipping industry,” Hugo de Stoop, CEO of Euronav, said.

Specifically, the proposed combination is structured as a voluntary conditional exchange offer by Frontline for all outstanding shares of Euronav at an exchange ratio of 1.45 Frontline shares for 1.0 Euronav share, possibly followed by a (simplified) squeeze out, with the aim to then propose a merger of Euronav into Frontline to Frontline’s and Euronav’s shareholders as soon as possible thereafter.

The combined group will be named Frontline, incorporated and headquartered in Cyprus and will in addition continue to operate from various offices in Europe and Asia including Belgium, Norway, UK, Singapore and Greece.

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