Tanker company John Frederiksen Frontline is merging with rival Euronav, as seen from a Thursday morning message.
“I am very excited and give my full support and commitment to this combined company,” says John Frederiksen in the stock exchange announcement.
The combined company will continue to use the Frontline name, with operations in Belgium, Norway, the United Kingdom, Singapore, Greece and the United States, and will have an estimated market value of more than $4.2 billion, it is reported.
Euronav CEO Hugo De Stoop will continue as CEO of the new combined company.
Today, John Fredriksen’s Hemen Holding is Frontline’s largest owner, with approximately 38.9 percent of the stock. Folketrygdfondet is the second largest owner with just over five and a half percent of the shares.
Frontline is valued at NOK 17.2 billion on the Oslo Stock Exchange and is down above five percent on Thursday morning. The stock is trading around 80 NOK.
directing on seven
The merger of the two companies will include a stock merger where each Euronav share will become 1.45 Frontline shares. This means that 59 percent of the shares in the new company will be owned by Euronav’s existing shareholders, while the remaining 41 percent will be owned by existing Frontline shareholders.
Euronav expects to pay a dividend of 12 cents per share before the merger is complete.
It was not mentioned who would occupy other positions in the management of the new company, but the board of directors will consist of seven members, three of whom will be from Euronav, two will be nominated by Hemen Holding, while two will be independent board members.
The Company asserts that the merger is conditional on approval, among other things, of the transaction structure and due diligence.
The companies write that it is currently too early to say anything about when the merger will be completed, and that they will provide updates along the way.
Euronave has hired Lazard as its financial advisor, while Front Line has hired brokerage ABG Sundal Collier as its financial advisor on the potential merger.
Nearly 100 million in losses last year
At the end of last year, Front Line had 70 ships in its fleet, with a total capacity of about 12.7 million heavyweight tons. It was decided not to pay dividends after the still-challenging tanker market in the wake of the Corona pandemic.
The net result for 2021 ended at minus $11.1 million, or nearly 100 million kronor. In 2020, net profit was 413 million NOK. On the other hand, the turnover ended at $749.4 million last year, compared to $1.2 billion in 2020.
The fourth quarter was a small relief for locker owners. As the Northern Hemisphere was preparing for the winter season, activity increased somewhat, and rates rose significantly, albeit from very low levels. Frontline CEO Lars Barstad said in a statement when the quarterly figures were presented, Frontline was able to benefit from higher prices and we are close to breakeven levels.
The combined company will have more than 140 ships in the fleet.
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