Frontline and CMB Complete Deal to Divide Euronav
The “strategic and structural deadlock” for the control and direction of tanker operator Euronav came to a close after shareholders approved the terms of the deal to divide Euronav. John Fredriksen’s Frontline reported it completed the sale of all of its shares of Euronav to the Saverys’ controlled CMB while the Saverys family completed the first steps to organize Euronav.
The two camps had been battling for over a year on the strategy and management of Euronav, one of the largest independent operators of VLCC and Suezmax crude oil tankers. Frontline had agreed in the summer of 2022 to merge its tanker fleet with Euronav in a deal that would have created the largest operator for key segments of the crude oil shipping business. CMB however opposed the merger and the strategy it represented calling instead for Euronav to refocus to accelerate the emerging trends away from oil and for decarbonization.
Frontline reported it completed on November 22 the sale of 13.7 million shares of Euronav, largely accumulated by the company and its allied organization Famatown over the past 18 months during the struggle for control. They received $18.43 per share or approximately $252.5 million in gross proceeds for the share sale. It represented 26.12 percent of Euronav and now CMB has just over 49 percent of Euronav. Under Belgian security law CMB will have to launch a tender offer for the shares of the company it does not own.
Frontline is acquiring 24 VLCCs from Euronav for an aggregate price of $2.35 billion. Euronav has a fleet of 41 VLCCs plus one more under construction. The transfer of the vessels will take place mainly in the fourth quarter of 2023 and partially in the first quarter of 2024.
Euronav also reported with the shareholder approval of the plan that it has realigned its Supervisory Board with the resignation of independent directors Grace Reksten Skaugen and Ole Henrik Bjørge as well as John Fredriksen and Cato Stonex, who had represented Frontline. At the same time, the Management Board was also reconstituted with Alexander Saverys becoming CEO, Ludovic Saverys becoming CFO, and Michael Saverys becoming Chief Chartering Officer. Two other executives from CMB also joined the management board along with the Saverys siblings. Previous members of the Management Board continue to advise the company through the end of 2023 for a smooth transition while the current General Counsel and General Manager continue in their roles but are no longer on the Management Board.
“Our immediate focus will be to continue to run the company as the best-in-class tanker platform, whilst we will at the same time engage with the new Supervisory Board on how to execute a strategy around diversification and decarbonization,” said Alexander Saverys.
The new strategy for Euronav calls for diversifying the fleet into different shipping segments to decrease the dependence on the transportation of crude oil. The Saverys have said they would consider possibly merging parts of CMB’s fleet into Euronav as well as buying and building “future-proof” tonnage. Their focus is to move to ammonia and hydrogen ships as the emerging alternatives. At the same time, they have said they would be looking to optimize the remaining fleet at Euronav after the sale of a third of the vessels to Frontline. Longer-term the strategy is to invest in the development of low-carbon engines, fuel supply systems, and the production of low-carbon fuels. CMB wants Euronav to play a leading role in the decarbonization of the shipping industry.