John Fredriksen’s Frontline has proposed a deal for shares in tanker-owning rival and U.S.-listed, Bermuda-based DHT Holdings.
DHT says the proposal is a non-binding, highly conditional proposal to acquire all of the outstanding shares of common stock of DHT in a stock-for-stock transaction.
In the proposal letter delivered to DHT’s Board of Directors on January 27 Frontline also disclosed that it has acquired more than 15 million shares of DHT, or approximately 16 percent of DHT’s outstanding common stock.
Frontline has proposed a ratio of 0.725 of a Frontline share for each share of DHT, which represents an implied price of $5.09 per DHT share, based on the closing price of Frontline shares of common stock on January 27, 2017.
Frontline has one of the world's largest fleets of VLCC and Suezmax tankers. A merger with DHT is anticipated to give Frontline a combined fleet of around 90 tankers and create the largest public tanker company by fleet size and trading liquidity.
Assuming significant cost synergies are achieved, as well as superior access to debt and equity capital markets, Frontline believes a combined entity would generate significant free cash flow and maximize value for both companies' shareholders.
DHT’s Board has unanimously adopted a one-year shareholder rights plan and declared a dividend of one preferred share purchase right for each share of DHT common stock outstanding at the close of business on February 9.
The plan is intended to give the Board and DHT time to properly consider the non-binding proposal and to prevent a hostile takeover of the company.
Lazard is serving as financial advisor to DHT, and Cravath, Swaine & Moore LLP is serving as legal counsel.