Frontline, Euronav agree to merge to form tanker giant

Market: Freight
07/04/22

Shipowners Frontline and Euronav have agreed to merge to form one of the largest tanker companies in the world with a fleet of 146 vessels.

The merger will be a stock-for-stock transaction, at a ratio of 1.45 Frontline shares for every Euronav share. The combined entity will operate as Frontline but it will be helmed by current Euronav chief executive Huge De Stoop and will have an estimated market capitalisation of $4.2bn. The enlarged firm will have 69 very large crude carriers (VLCCs), accounting for 8.5pc of the total global VLCC fleet. It will also have 57 Suezmax vessels and 20 Aframax tankers.

Frontline's shareholders will control 41pc of the new company, while Euronav's shareholders will control 59pc.

Consolidation in the shipping market has gained momentum in recent years as continued pressure on rates makes it challenging for smaller shipowners to stay profitable. Heidmar and Capital Ship Management merged earlier this year, and there was a high-profile merger between Diamond S Shipping and International Seaways last year. Diamond S had previously entered a partnership with Norden in 2020, and Hafnia Tankers and BW Tankers merged to create one of the world's largest oil product tanker fleets in 2019.

The first rumblings of a deal occurred in October 2021 when Norwegian shipping tycoon and Frontline shareholder John Fredriksen increased his stake in Euronav through CK Limited. CK Limited is one of Euronav's largest shareholders with a 9pc stake, and it also owns 39pc of Frontline, which means Fredriksen will have a substantial holding in the new company and is likely to be its biggest single shareholder. Euronav's other major shareholder is the Saverys family with a 10pc stake.

The merger has already been approved by the board of directors of both companies, but it still requires regulatory approval.

By John Ollett

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