Frontline Would Acquire 24 VLCCs in Deal with CMB to End Euronav Stalemate
The long-running battle for control of tanker operator Euronav is taking a new twist with the company confirming widespread rumors over the potential agreement which includes the sale of vessels. Unable to take control of the company, the Fredriksen-led Frontline is in advanced discussions with Compagnie Maritime Belge (CMB) to buy half of Euronav’s fleet in exchange for its shares in the company.
Euronav issued its statement in response to the ongoing speculation which had reached the media which had prompted a suspension of trading in its stock at midday. It is the latest twist in a battle that went public nearly 18 months ago when well-known investor John Fredriksen first proposed combining Euronav and Frontline to create the world’s largest independent tanker operator with more than 10 percent of the global VLCC and Suexmax fleet.
Plans for the merger were announced in April 2022 and formalized three months later but immediately encountered strong resistance from the Saverys family which was the largest shareholder in Euronav through their company CMB. Frontline walked away from the merger agreement in January 2023, setting off ongoing arbitration while Frontline and CMB agreed to split the board and jointly manage Euronav.
In today’s statement, Euronav confirms that “Frontline and CMB are in discussions on an integrated solution to the strategic and structural deadlock in Euronav.” According to all of the companies involved, the discussions are “well advanced” but no final agreement has been reached.
The proposed terms call for CMB to acquire Frontline’s shares of Euronav, a total of nearly 57 million shares for $18.34 per share. It would start a public mandatory offer at the same price.
Frontline would acquire 24 VLCC tankers from Euronav’s current fleet of 41 VLCCs for $2.35 billion. Frontline currently has a fleet of 22 VLCCs as well as its Aframax and Suezmax tankers. If the acquisition of the vessels is completed, Frontline would be the largest publicly traded tanker operator.
The deal would bring to a close the contentious battle which has reportedly also deadlocked the boardroom of Euronav. Since May, the company has been running with an acting chief executive after Hugo De Stoop who had led the company since 2019 stepped down amidst the power struggle and debate over the future direction of the company. While everyone agrees that the tanker business is in a turnaround and likely at the beginning of an upcycle, CMB advocates for a faster business transition to reflect the move away from fossil fuels.
As part of the proposed agreement, Euronav would also terminate its arbitration against Frontline for having walked away from the 2022 merger agreement. Protecting the shareholders’ interests, Euronav had filed both an emergency arbitration and proceeding after Frontline walked away from their agreements. The emergency proceeding went in Frontline’s favor but the full arbitration and possible penalties for the termination is ongoing.
The price of Euronav shares had been fluctuating on the rumors, jumping more than 17 percent before trading was suspended pending today’s announcement. Frontline’s share price had also been impacted down at midweek but up more than seven percent on today’s news approaching the company’s 52-week high reached in March 2023.