Oil Tanker Players Euronav, Frontline Plan $4.2B All-stock Merger

Belgian oil tanker group Euronav and smaller Oslo-listed rival Frontline plan to merge in an all-stock transaction valued at $4.2 billion that they said would cut costs and help in their low-carbon transition.

Euronav shareholders will own 59% of the combined group and will also receive a cash dividend before the deal closes, while Frontline owners will hold the remaining 41%, the companies said in a statement on Thursday.

The merged company will use the Frontline name and will be led by Euronav CEO Hugo De Stoop.

Euronav's shares were up 7.5% at 0728 GMT while Frontline's were down 4.9%.

The combination offers economies of scale that will facilitate increased fleet utilization and ease a transition to the digitalization of logistics and the adoption of lower-carbon fuels for tankers, the companies said.

"The combination would be a leading global independent oil tanker operator," KBC Securities wrote in a note to clients, while cautioning that there was no assurance yet that a definitive merger agreement will be reached.

The new firm would have a fleet of 146 tankers, including 69 very large crude carriers (VLCC) and 57 Suezmax vessels.

Frontline's largest owner John Fredriksen said the combination of Frontline and Euronav would establish a market leader and position the combined group for continued shareholder value creation in addition to significant synergies.

"I am very excited and give my full support and commitment to this combined platform," Fredriksen added.

The transaction remains subject to agreements on the transaction structure and terms, due diligence, and regulatory approvals, the companies said.

Euronav was advised on the deal by Lazard, while Frontline used ABG Sundal Collier. In addition, independent directors on Frontline's board retained DNB Markets.

(Reuters - Reporting by Terje Solsvik; Editing by Jason Neely and David Holmes)