US Court Denies Motion Permitting CMB to Close Mandatory Euronav Tender

 

The Saverys family is a step closer to executing their vision for a diversified shipping company focusing on the opportunities in decarbonization after a U.S. court refused to grant an activist shareholder a preliminary injunction to stop the mandatory tender offer for shares of Euronav. The offer is due to close tomorrow, March 15, as the last step to complete the multi-stage transaction which saw their company CMB (Compagnie Maritime Belge) settle with Frontline, gain a 49 percent stake in Euronav, and execute a transaction for Euronav to acquire CMB.TECH.

The United States District Court for the Southern District of New York denied a motion for preliminary injunction filed by certain funds managed by FourWorld Capital Management, an activist shareholder that filed suit in New York and Belgium contesting the mandatory offer. Under Belgian securities law, CMB was required to launch a tender offer for the remaining shares of Euronav, although management highlighted that it hoped shareholders who shared its vision for the future would remain investors.

FourWorld argues in its filing in New York that CMB disseminating materially false and misleading offering materials relating to the U.S. offer. The complaint was seeking an injunction restraining CMB from completing the U.S. offer and an award of damages in an unspecified amount. The filing in Belgium alleges the price of the mandatory offer is too low as it does not take into account special benefits that would have been granted to Frontline on top of the cash purchase price paid by CMB for Frontline’s Euronav shares. They are asking the Market Court to order CMB to increase the bid price.

In an unapologetic speech to the investment community this week, Alexander Saverys CEO of CMB and now Euronav reiterated their vision saying that they believe “pure play shipping is a thing of the past.” He recognized that the Wall Street investment community has been “particularly critical,” after the family opposed and successfully blocked the merger of Euronav and Frontline. He dismissed the doubters saying, “technocratic boards that know everything about Wall Street, but nothing about the Malacca Strait.”

He argues that bigger is not better in today’s shipping world. Instead of seeing decarbonization as a threat, they see it as a “huge opportunity.” 

He recounted how a shareholder had approached him with a complaint about the depressed stock price. He said instead of recounting the many challenges of the past few months, he responded that the stock price had been held back by the mandatory offer.

The company still faces the legal challenges, but the offer closing can proceed. If the court in Belgium were to find for the plaintiff, CMB would have to raise the price and reopen the offer, but they contend the proceeding is without merit and intend to vigorously defend against it.

With the mandatory offering completed, the combined company to be known as CMB.TECH with Euronav as a tanker operator alongside the group’s other interests in dry bulk, product tankers, and offshore service vessels, will move forward with the family’s vision of using carbon to decarbonize for the future.

Update: On Friday, the Belgian court also refused the petition permitted the CMB mandatory tender for Euronav close as scheduled today, March 15.