Euronav Rejects CMB Shareholder Proposals Opposing Frontline Merger

Euronav opposition to merger from largest shareholder
Euronav is facing opposition from its largest shareholder (file photo)

Published May 2, 2022 1:42 PM by The Maritime Executive

The war of words over the proposal to merge Euronav and Frontline to create the world’s largest tanker company continues to heat up with Euronav finding itself caught between two of Europe’s large investment groups. Since the concept of the merger was announced at the beginning of April 2022, Norway’s famed investor John Fredriksen has been driving the deal while Belgium’s Saverys family, the largest investors in Euronav, has declared their opposition. 

In addition to the ongoing negotiations to determine the terms of the merger, Euronav finds itself battling for control of the company with both investors increasing their position. On Friday, Euronav’s supervisory board responded to the latest proposals from the Saverys drawing the battlelines deeper.

With Euronav’s Annual General Meeting scheduled for May 19, the Saverys have been building their position in the stock of Euronav through their Compagnie Maritime Belge, also a suitor for Euronav. The Saverys reported passing 16 percent ownership, although they would need to reach 25 percent of Euronav to block the deal. They have also proposed an alternate slate of three directors for election to the five-member Supervisory Board and amendments to the agenda for the meeting. 

“CMB wants to implement an alternative business plan involving a phase-out of Euronav’s core business and a likely combination of CMB Tech and Euronav that would conflict with Euronav’s current and future strategy,” said Euronav in its statement. “Euronav has decided to recommend that shareholders vote against the resolutions put forward by CMB.”

Using strong language, Euronav said that the three candidates lack independence, that they would weaken the board profile, and “threaten to bring conflicts of interest into the boardroom.” The nominees, who include Ludovic Saverys, Patrick De Brabandere a close ally of the family, and Bjarte Boe a Scandinavian investment banker who was on CMB Tech’s board, would “be unable to offer an unbiased opinion on any future scenario for Euronav,” the board writes urging a no vote.

Euronav also reported that it had reviewed alternative proposals from, CMB for a combination saying the proposals would “likely destroy shareholder value.” They called the two companies highly incompatible with dissimilar financial profiles and business characteristics.

When the companies announced that they were exploring a merger, analysts called it well-timed to respond to the latest trends in the oil market. It has been pointed out that the company would control 10 percent of the global VLCC and Suezmax fleet. Fredriksen has also been reported to be increasing his position in Euronav passing the 10 percent mark recently. 

The battle for control of Euvonav will determine the outcome of the merger. Frontline and Euronav said they were working to agree on and finalize the transaction structure for the business combination which would still require the approval of the shareholders and regulators.