The all-stock deal had been facing opposition from Compagnie Maritime Belge, the largest shareholder of Euronav, on the basis that it had undervalued the Belgian oil tanker operator
Euronav and Frontline are involved in ocean transportation and storage of crude oil. (Credit: Euronav)
Frontline has announced the scrapping of its previously announced merger deal with rival oil tanker operator Euronav, which was aimed at creating an entity with a market capitalisation of over $4bn.
The Norway-based oil tanker operator did not disclose the actual reason behind the termination of the all-stock deal.
However, in December 2022, Compagnie Maritime Belge (CMB), which is the largest shareholder of Euronav with a stake of over 25%, asked for the deal to be abandoned as it undervalued the company among other reasons.
Frontline said that owing to the termination of the deal, it will not make a voluntary conditional exchange offer for all the shares of Euronav. The exchange offer was anticipated to be launched in Q1 2023.
Frontline also said that it has dropped plans to pursue a listing on Euronext Brussels.
Frontline CEO Lars Barstad said: “We regret that we could not complete the merger as envisaged in July 2022, as that would have created the by far largest publicly listed tanker company.
“At the same time, both companies have independently very large fleets of crude oil and product tankers, and are already enjoying economies of scale as evidenced by our respective recent financial reports.
“Frontline will with its efficient operations continue to capture value as this cycle unfolds, and remain focused on maximising dividend capacity per share.”
Both Frontline and Euronav are engaged in ocean transportation and storage of crude oil. The combined group was to operate as Frontline with headquarters in Cyprus.
As per the terms of the deal, 1.45 of Frontline shares were to be exchanged for each of the shares of Euronav. The deal would have seen existing Euronav’s shareholders take a stake of around 55% in the combined entity, while existing Frontline shareholders would own a stake of 45%.