The Saverys family’s Compagnie Maritime Belge (CMB) continues to reject the proposed Euronav takeover bid by John Fredriksen’s Frontline, claiming that without its backing, a squeeze-out would be “impossible” and a legal merger of the two tanker giants “highly unlikely”.
On Monday, Euronav and Frontline announced a definitive stock-for-stock combination agreement that would see an exchange ratio of 1.45 Frontline shares for every Euronav share. The combined group would be named Frontline, incorporated and headquartered in Cyprus and listed in Brussels, Oslo and New York. Hugo De Stoop will serve as the CEO of the merged company, with Frontline CEO, Lars Barstad, joining the board.
CMB, the largest shareholder of Euronav with a 19.6% stake against Fredriksen’s 18.8%, said it remains opposed to a combination with Frontline as it believes it would not create additional value for Euronav’s stakeholders. The company, which has been in control of Euronav since 1997, cited a lack of information on the valuation of the two companies proposed as one of the reasons it disagreed with the merger, as well as the risk that the takeover bid’s value and structure would be dilutive to Euronav shareholders.
“The structure that will result from the takeover bid includes two separate competing companies, with separate listings and minority shareholders that compete for the same clients and the same corporate opportunities. Each commercial or investment decision risks leading to conflicts of interest and governance issues,” CMB said.
In a release on Tuesday, CMB noted that the market capitalisation of the combined entity would still be small compared to many other large shipping companies, not making the company meaningfully more attractive to many new types of investors.
The company maintained that Euronav should diversify into other shipping asset types and focus on decarbonisation adding that the company doesn’t need to become larger to execute a sustainability strategy.
“This strategy does not mean that Euronav would sell all of its tankers at once, just before a tanker upcycle. CMB continues to believe the tanker market will generate good returns in the years to come, but that cash flows from oil transportation should be reinvested in the diversification and decarbonisation of the Euronav fleet,” CMB concluded.
