Tanker Merger Proceeding as Euronav’s Shareholders Reject CMB

Shareholders of tanker giant Euronav rejected proposals and an opposition slate of directors from the Saverys family and Compagnie Maritime Belge during the general meeting today clearing the way for the company to continue its discussions with John Fredriksen and Frontline for a merger that would create the largest operator of VLCC and Suezmax tankers. After the meeting, Euronav released a statement saying that it was making good progress on the discussions for the merger.

Belgium’s Saverys family, which is the largest shareholder in Euronav, had come out against the proposed merger presenting an alternate plan to merge its CMB.Tech with the tanker company. As part of their opposition, they proposed three directors for election to the board of Euronav, including 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. Euronav rejected the slate saying they would be unable to provide an unbiased opinion on matters before the board and proposed the re-election of two directors and the appointment of a new director.

Shareholders sided with Euronav during the elections voting two-thirds in favor of the Euronav slate with only a third supporting the opposition slate. At the conclusion of the meeting, Euronav reported that Grace Skaugen who was re-elected to the board had also been appointed the new chairperson replacing Carl Steen who had decided not to stand for re-election after having completed two terms.

“The results of the Supervisory Board election and its composition deliver a clear signal from a majority of the shareholders that they are in favor of the strategy outlined by Euronav’s Supervisory and Management Boards, including the proposed merger with Frontline,” the company said in its statement reporting the results of the meeting.

In April, Euronav and Frontline announced that they were exploring a merger valued at $4.2 billion to combine the two companies under the Euronav management team. Famed investor Fredriksen said the combination would create a market leader better positioned to address the changing market while increasing utilization and revenues. If completed, the deal would create a combined fleet of 146 vessels, consisting of 69 VLCC and 57 Suezmax vessels which Standard and Poors’s estimates would make up roughly 10 percent of the global fleet plus an additional 20 LR2/Aframax tankers.

Both the Saverys and Fredriksen have been increasing their share position in Euronav. On May 17, Compagnie Maritime Belge filed a statement with the U.S. Securities Exchange Commission showing that it now holds just over 37 million shares, which equates to nearly 18.5 percent of the shares outstanding. Fredriksen is believed to be holding approximately 12 percent of Euronav’s shares. Analysts report that the proposed merger will require 75 percent of the shares cast in favor to proceed.

Euronav said that it is continuing to make “good and solid progress,” with respect to the discussions with Frontline exploring issues including the structure of the transaction, combined business strategy, and cost and revenue synergies. The boards are working diligently they reported to finalize the details for the merger.

The current proposal is for an all-stock combination that would give Euronav shareholders 59 percent of the combined company and Frontline’s investors 41 percent. However, the companies have not finalized the structure or terms and might elect alternates that would require a simple majority for shareholder approval.