Frontline Plc, the shipping giant controlled by billionaire John Fredriksen, is giving up its plan to create the world’s largest publicly listed oil-tanker company after opposition from one of Belgium’s oldest shipping families.
(Bloomberg) — Frontline Plc, the shipping giant controlled by billionaire John Fredriksen, is giving up its plan to create the world’s largest publicly listed oil-tanker company after opposition from one of Belgium’s oldest shipping families.
Frontline — listed in both Norway and the US — now won’t make a voluntary conditional exchange offer on all outstanding shares of Euronav and is formally withdrawing its earlier intention, the company said late Monday. Frontline shares surged as much as 20% in Oslo on Tuesday, while Euronav dropped 21% on the news.
The termination brings to an end, at least for now, a battle between two shipping magnates for control of Antwerp-based Euronav. Fredriksen last year bought a stake in Euronav, before proposing to combine it with Frontline. But Compagnie Maritime Belge, which steadily increased its holdings in Euronav in the last few months, has been opposed to the plan from the outset, arguing that it doesn’t create shareholder value.
Euronav will examine Frontline’s letter and reserves all rights and actions after the termination, it said in a statement on Tuesday. Regardless, the “supportive and sustainable fundamental factors of the tanker markets have started to deliver what Euronav and most sector commentators believe will be a prolonged upcycle,” the company said.
While it’s regrettable that the deal has fallen through for the tanker industry, reverting to historic pricing implies 35% upside for Frontline shares and 13% downside for Euronav, Fearnley Securities’ Oystein Vaagen wrote in a note.
Frontline and Euronav both have large fleets exposed to a tanker market that is likely to remain robust for the foreseeable future, Evercore ISI analysts Jonathan Chappell and Sean Morgan said in a note. The companies are set to generate strong cash flow, generously return capital to shareholders, and move from current NAV discounts to premiums as dividends accelerate, they added.
–With assistance from Alex Longley and Christian Wienberg.
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