Not only is Frontline getting more than half of Euronav’s VLCC fleet, it might also be getting its youngest ships.
DNB Markets analyst Jorgen Lian said details of the blockbuster deal suggest the tanker being acquired by John Fredriksen’s Frontline are Euronav’s most modern, potentially with an average age just over five years old.
“The acquisition would more than double Frontline’s VLCC fleet from the current 22 vessels with an average age of 6.2 years and solidify Frontline as the leading public tanker company,” Lian said.
On Thursday — and on the heels of a TradeWinds report from 28 September suggesting the two sides were close to a deal — Saverys family-backed Euronav said it was willing to sell 24 of its 41 VLCCs to Frontline for $2.35bn.
In turn, the Saverys’ Compagnie Maritime Belge would buy Frontline’s 26.1% stake in Euronav for $18.43 per share.
Lian said the $18.43 is in line with his net asset value estimate of $18.33 per share, “which should imply the vessel purchase price should also roughly reflect current broker values for the 24 VLCCs”.
“Based on our estimated fleet values for Euronav, this could indicate Frontline is acquiring the 24 most modern vessels currently in service at an average age of 5.3 years on our numbers,” he said.
In the note, Lian said DNB Markets was dropping coverage of the companies because it is working as a financial advisor to Frontline on the deal.
Brussels-listed Euronav has had four ammonia and LNG-ready ships delivered this year, plus seven others built since 2020. It has 11 VLCCs built in 2016, the most of any other year.
In April 2022, Frontline announced a $4.2bn effort to acquire Euronav in a move cheered by many market observers.
But the Saverys family was not willing to play ball and eventually blocked a traditional merger by acquiring roughly 25% of Euronav.
Fredriksen held fast with about the same holding and the two sides had been cooperating to operate the company since.
The move announced on Thursday was lauded as a reasonable and pragmatic course of action for the two sides.
So far, investors have backed both companies.
Frontline jumped NOK 1.28 ($0.12), or 0.7%, to NOK 198.84.
In Brussels, Euronav shares hit €16.40 ($17.26), up just under €0.10 or 0.6%.
