Euronav tumbles after Frontline abandons tanker merger deal

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Euronav tumbles after Frontline abandons tanker merger deal
Credit: © Reuters.

By Geoffrey Smith -- Euronav (NYSE: EURN ) stock tumbled in Tuesday morning trading in Europe after fellow shipping group Frontline (NYSE: FRO ) abandoned the all-share merger offer it had touted in July last year. 

Frontline, owned by the veteran Norwegian magnate John Fredriksen, withdrew its offer after apparently failing to bridge differences with CMB, the holding company of the Belgian Saverys family that is Euronav's largest shareholder. CMB, which has been trying to push the adoption of hydrogen power in its shipping fleet for nearly a decade, wanted more emphasis on "diversification and decarbonization" in the company's future strategy. 

The news means the end of a deal that would have created one of the world's largest fleets of oil tankers, with annual revenue of over $1.5 billion, at a time when the global industry is in flux because of G7 sanctions on the world's second-largest oil exporter, Russia. 

Frontline's offer had driven Euronav's share price higher by two-thirds since being floated in July, but Euronav stock had already come well off its highs in recent weeks as the strength of the Saverys' reservations became clear. 

Fredriksen had tried to bring the Saverys family round by allowing them to raise their stake to over 25% ahead of the deal, trimming Frontline's own stake in Euronav to 17.8% in the process. Frontline had also scaled down its aspirations, saying it would be happy to operate Euronav as a separate, but majority-owned, subsidiary. CMB had called the proposal "unworkable and value-destructive" in a letter to Euronav's supervisory board in December.

By 05:00 ET (10:00 GMT), Euronav (EBR: EUAV ) stock was down 17.3% on the Euronext exchange, around 10% above where it was in July before Frontline made its offer. Frontline stock was up over 20% in premarket trading in New York.


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