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FRO – Fronline Ltd. and Euronav NV sign definitive combination agreement to create a leading global independent oil tanker operator

Jul 11, 2022

Frontline Ltd. (“FRO” or “Frontline”) and Euronav NV (“EURN” or “Euronav”) are pleased to announce that they have entered into a definitive Combination Agreement for a stock-for-stock combination based on an exchange ratio of 1.45 Frontline-shares for every 1.0 Euronav-share (the “Combination”), which was unanimously approved by all the members of Frontline’s Board of Directors and by all members of Euronav’s Supervisory Board. The agreement memorialises the principal aspects of the previously announced term sheet that was signed on 7 April 2022.

The combined group will create a leading global independent oil tanker owner and operator with the management, capabilities, resources and scale to successfully capitalise on the opportunities presented by the new era in the sustainable shipping industry.

With its complementary platforms, financial strength and skills, the combined group will be particularly well placed to provide innovative, clean and sustainable oil shipping solutions in a highly competitive environment. The combination of the two organizations will create a single best-in-class, highly competent and experienced team. The enlarged fleet will enable the combined group to provide better service to customers on a global basis. Additionally, and in view of rapid technological changes, including digitalisation and new “low carbon fuels” adoption, the combined group will be able to mobilise more resources and achieve meaningful scale to meet these challenges and opportunities from the energy transition.

Commenting on the transaction, Mr. John Fredriksen said: “This transaction creates a clear market leader in the tanker market and will position the combined group for continued, sustainable shareholder value creation and the realisation of significant synergies. Frontline, with a fleet of 146 vessels, will be able to offer value enhancing services for our customers and increase fleet utilisation and revenues which will benefit all stakeholders. I am very excited and give my full support and commitment to this combined platform.”

Mr. Hugo de Stoop, CEO of Euronav said: “The proposed Combination is a huge opportunity to take a leading position in the tanker industry as we seek to master the transition to a world of clean, safe and sustainable shipping. This transaction represents a unique opportunity to deliver substantially better service to our customers, enhanced returns to our shareholders, and to provide a unique platform where people can fully express their talents while advancing our ambitious sustainability strategy towards decarbonisation of the shipping industry.”

Mr. Lars H. Barstad, CEO of Frontline said: “Frontline believes this transaction will form a powerful combination at an exciting point in the cycle. We are amalgamating a strong operational, technical and commercial platform to enhance shareholder value.”

Combination Structure

  • The proposed Combination is structured as a voluntary conditional exchange offer (the “Tender Offer”) by Frontline for all outstanding shares of Euronav at an exchange ratio of 1.45 Frontline shares for 1.0 Euronav share, possibly followed by a (simplified) squeeze out, with the aim to then propose a merger of Euronav into Frontline to Frontline’s and Euronav’s shareholders as soon as possible thereafter (the “Merger”). Based on Frontline share price USD 8.34 per share (as of US close 8 July 2022), the proposed exchange rate represents a value of USD 12.09 per Euronav share.

Frontline and Euronav have, in this respect, published a notice in accordance with article 8§1 of the Royal Decree of 27 April 2007 on Public Takeover Bids regarding Frontline’s intention to make the Tender Offer which can be found here: https://live.euronext.com/en/product/equities/BMG3682E1921-XOSL#CompanyPressRelease-11153198

  • Assuming all Euronav shares are tendered in the Tender Offer, and following the private acquisitions of Euronav shares in exchange for Frontline shares undertaken in May and June, the combined company will be held as follows: approximately 55% by existing Euronav shareholders and approximately 45% by existing Frontline shareholders.
  • The completion of the Tender Offer will be conditioned upon Frontline owning post Tender Offer at least 50% +1 of all the outstanding shares in Euronav (excluding treasury shares unable to be tendered), the relocation of Frontline to Cyprus, the absence of material adverse change, the receipt of required regulatory approvals and other customary conditions. Frontline together with its affiliate Famatown Finance Limited currently already own 37,881,478 shares in Euronav or 18.8% of the total outstanding shares (excluding treasury shares)i.
  • Prior to the Tender Offer completion, Euronav will be allowed to pay a dividend for a total amount of USD 0.09 per Euronav share and Frontline will be allowed to pay a dividend of USD 0.15, both with no impact on the exchange ratio; for any dividends from Frontline in excess of such amount, the Euronav shareholders accepting the Tender Offer will receive a compensation per Euronav share equal to the dividend amount per Frontline share times 1.45.
  • The combined group will be named Frontline, incorporated and headquartered in Cyprus and will in addition continue to operate from various offices in Europe and Asia including Belgium, Norway, UK, Singapore and Greece.
  • The combined group will be listed on Euronext Brussels, OSE and NYSE upon Tender Offer completion.
  • Following completion of the Tender Offer, the governance and senior leadership of the Group will be as outlined under the header “senior leadership and governance.” Euronav and Frontline will endeavor to complete a full legal merger. Should, after completion of the Tender Offer, a squeeze-out or legal merger of both companies not yet be feasible, then during such interim period to the full merger, Euronav will retain its separate listings on Euronext Brussels and the New York Stock Exchange, and Euronav governance, as well as further integration joint projects and synergies, shall be further organized taking into account legal obligations of Euronext Brussels listed issuers, including article 7:97 of the Belgian Code of companies and associations.

Strategic Benefits of the Combination

The combination will create a leading independent large crude tanker operator with an anticipated market capitalisation of more than USD 4 billion based on market values of the respective companies as of 8 July 2022, adjusted for the shares in Euronav currently held by Frontline.

The combined Net Revenue and EBITDA for the two companies in 2021 was approximately USD 668 million and USD 246 million, respectively.

The combined group will benefit from a balanced global vessel footprint with highly complementary platforms including 146 vessels consisting of 68 VLCC, 56 Suezmaxes, 20 LR2/Aframax and 2 FSO vessels. The best-in-class combined expertise of these businesses, supported by a strong balance sheet and access to attractive financing will support industry leading operational break-even levels for the combined fleet.

Value Creation & Synergies

The Combination is anticipated to deliver significant synergies of a minimum of USD 60 million on an annualised basis, including savings in selling, general and administrative expenses and other expenses resulting from (among other things):

  • A larger fleet allowing for a better utilisation through, for example, use of combination voyages
  • Economies of scale driven by cost synergies in respect of daily operational expenditures, dry-dock, and special project expenses
  • Financial savings, primarily owing to a larger and stronger balance sheet improving the cost of debt

The Frontline Board and Euronav Supervisory Board strongly believe the combined group will represent a premier and well-capitalised company through which investors can participate in the tanker market, benefiting from tangible economies of scale via pooling arrangements, procurement opportunities, reduced overhead and enhanced access to capital, as well as a highly liquid stock.

Both the Frontline Board and Euronav Supervisory Board consider the transaction to be in the best interests of all shareholders and have each unanimously approved the Combination Agreement, and subject to the absence of a superior bid (as defined in the takeover rules) the Euronav Supervisory Board has undertaken to recommend to its shareholders to tender their Euronav shares in the Tender Offer.

Senior Leadership and Governance

The combined group will be headed by Mr. Hugo De Stoop as Chief Executive Officer. Hugo De Stoop has a strong track record of sustainable value creation. His experience will support the speed of execution of the Combination, allowing the combined group to manoeuvre with efficiency in a tanker industry undergoing rapid and fundamental changes.

The combined group will benefit from an efficient governance structure designed to promote effective performance, with a one-tier Board limited to seven directors, the majority of whom, including the Chair, will be independent.

Upon completion of a legal merger or as soon as Frontline holds 75% or more of Euronav’s outstanding shares (excluding treasury shares held by Euronav), three of the current independent directors of Euronav will be appointed to the combined group’s board. Up to two non-independent directors will be nominated by Frontline’s largest shareholder Hemen Holding Ltd. (“Hemen”), and two new independent directors will be identified by Euronav and Hemen jointly, including the Chair of the board of the combined group. Frontline CEO, Mr. Lars H. Barstad, will join the Board of the combined group as a representative of Hemen Holding Ltd.

Should there be an interim period between completion of the Tender Offer and the completion of a legal merger (or as long as Frontline holds less than 75% of Euronav’s outstanding shares (excluding treasury shares held by Euronav)), then upon completion of the Tender Offer a one-tier board comprising seven directors will be implemented by Frontline, with the following nomination rights to reflect a proper balance of representation within the boardroom: three of the current independent directors of Euronav will be appointed to the combined group’s board as independent directors, up to three non-independent directors will be nominated by Hemen, and one new independent director—the Chair of the combined group—will be identified by Euronav and Hemen jointly.

In order to ensure efficient execution of the Combination, an integration committee is preparing the integration plan to be implemented immediately following the closing of the Tender Offer.

Creating a Leader in Sustainable Shipping

The combined group will create a leader in sustainable shipping, aiming for the highest Environmental Social and Governance (“ESG”) standards in the industry. This will provide a platform for extending Euronav and Frontline’s leading positions in sustainable shipping and will allow the combined group to further advance industry best-in-class sustainability practices and strategy. Both entities have set ambitious decarbonisation targets that will be further enhanced through this combination.

Moreover, the combined group will benefit from an ESG committee composed of executive and board representatives. This committee will allow for proper oversight of the combined group’s sustainability strategy.

Indicative Timetable and Next Steps

Frontline will be relocated from Bermuda to Cyprus prior to the launch of the Tender Offer. The Tender Offer is expected to be launched in Q4 2022, once the relocation is achieved, and Frontline intends to proceed with a (simplified) squeeze out if the conditions therefore are met.

The Merger will be pursued as soon as possible following the Tender Offer, with the aim then being to submit the Merger to the Frontline and Euronav shareholders’ meetings. In the meantime, the parties will pursue all the corporate and other steps necessary for the Combination.


Lazard is serving as financial advisor to Euronav. Freshfields Bruckhaus Deringer LLP is serving as legal counsel to Euronav. ABG Sundal Collier ASA is serving as financial advisor to Frontline and DNB Markets, a part of DNB Bank ASA, has acted as financial advisor to the independent part of the Frontline Board. Advokatfirmaet Schjødt AS, Allen & Overy LLP, Seward & Kissel LLP and MJM Limited are serving as legal counsel to Frontline in connection with the combination. KPMG is advising Frontline on tax related matters.