Frontline and Euronav NV announce possible combined group

Posted on April 8, 2022 at 11:24 a.m. by

The Maritime Executive

[By:  Frontline and Euronav NV]

Frontline Ltd. (“FRO” or “Frontline”) (NYSE: FRO – OSE: FRO) and Euronav NV (“EURN” or “Euronav”) (NYSE: EURN & Euronext: EURN) are pleased to announce that the companies have a signed a term sheet unanimously approved by the independent members of the Frontline board of directors and by the Euronav supervisory board, on a possible combination of actions between the two companies, on the basis of a report exchange of 1.45 FRO shares for each EURN share, resulting in Euronav and Frontline shareholders owning approximately 59% and 41%, respectively, of the combined group. Euronav is expected to pay aggregate dividends of up to 12 cents prior to the closing of the business combination with no impact on the exchange ratio.

Should the combination materialize, the combined group would continue as Frontline and continue to operate from Belgium, Norway, the United Kingdom, Singapore, Greece and the United States. The combined group will be led by Mr. Hugo De Stoop as chief executive and the combined group’s board of directors is expected to consist of seven members, including three current independent members of Euronav’s supervisory board, two appointed by Hemen Holding Limited (“Hemen”) and two additional new independent directors. Frontline’s largest shareholder, Hemen, and related companies holding Euronav shares have pledged to support the potential transaction.

Commenting on the potential combination, Mr John Fredriksen said: “A combination of Frontline and Euronav would establish a market leader in tankers and position the combined group for continued creation of shareholder value in addition to significant synergies. The new Frontline would be able to offer value-added services for our customers and increase fleet utilization and revenue, which would benefit all stakeholders. I am very enthusiastic and I give my full support and commitment to this combined platform”.

A combination would create a leading independent global tanker operator, with:

A market capitalization of over $4.2 billion based on the market values ​​of the respective companies as of April 6, 2022

Participation in the world’s leading tanker market with 69 VLCC vessels and 57 Suezmax vessels, and 20 LR2/Aframax vessels

A strong balance sheet and access to attractive financing, supporting industry-leading levels of operational profitability for the combined fleet

Combined leading expertise in the shipping industry with the ability to attract and retain world-class talent

Significant benefits from a larger combined fleet resulting in, among other benefits, better overall utilization and cost synergies that will drive increased shareholder value

Significant synergies related to general and administrative expenses and other savings that are expected to be extracted from the combined entity; and

Leader in sustainable shipping, aiming for the highest ESG standards in the industry

A combination of Frontline and Euronav would bring together two complementary platforms in a highly competitive environment. The two organizations would create a unique, best-in-class, highly skilled and experienced team. The expanded fleet would allow the combined group to provide better service to customers on a global basis. Additionally, and given rapid technological change, including digitalization and the adoption of new “low-carbon fuels”, the combined group would be able to mobilize more resources and achieve significant scale to meet these challenges and opportunities of the energy transition.

Mr. Lars H. Barstad, CEO of Frontline, said, “Frontline believes this transaction would be a powerful combination at an exciting time in the cycle. The combination would create a solid platform to further enhance shareholder value for our investors.

Mr. Carl Steen, Chairman of Euronav, said: “A transaction between Frontline and Euronav should bring real value to both sets of shareholders. The financial strength of the combined group, with a strong management team, would make the combined entity well placed to maximize value throughout the tanker market cycle.

Mr. Hugo De Stoop, CEO of Euronav, said: “This transaction would mark an exciting development for the tanker industry, creating a leading tanker company that would be positioned to meet customer needs, support partners and drive technology and sustainability initiatives to lead the energy transition.

A combination remains subject to agreement on a transaction structure, confirmatory due diligence, agreement on the terms and conditions of the potential combination agreement, applicable board, shareholder, client, lender and/or regulatory authorities, employee consultations and other customary performance conditions.

Frontline and Euronav are working diligently to agree and finalize an appropriate transaction structure for the potential business combination. It is premature to guide the market as to when such a combination can be achieved and there can be no assurance that a definitive agreement will be reached between the parties, and the completion of any transaction is subject to several conditions, as set out above. Frontline and Euronav will inform all stakeholders of any future developments in accordance with applicable regulations.

The products and services described in this press release are not endorsed by The Maritime Executive.