European equities markets were upbeat about both Frontline and Euronav after TradeWinds revealed that John Fredriksen was in talks to snatch part of the Belgian tanker owner’s fleet.
In midday trading in Oslo, Frontline shares shot up to NOK 197.80 ($18.63), a jump of NOK 3.48, or 1.8%, while Euronav shares in Brussels rose €0.20 ($0.21), or 1.2%, to €16.51.
The jumps followed a TradeWinds report from Thursday on rumours that Fredriksen-backed Frontline was looking to acquire a sizeable number of Euronav’s 41 VLCCs, plus a smaller number of its 26 suezmaxes.
In July 2022, Fredriksen proposed a $4.2bn deal in which Frontline would acquire Euronav. The deal was cheered by equities analysts, but opposed by the Saverys family.
The Belgian shipping dynasty wanted to push the company away from tankers and quickly built up a 25% stake in Euronav through its Compagnie Maritime Belge, which in effect blocked a traditional merger.
In January, Frontline announced it was scuttling the merger attempt and the Fredriksen and Saverys camps have been running the company jointly since.
Pareto Securities’ Eirik Haavaldsen said the suspected deal would be positive for both companies’ shares, as Euronav was trading at a discount to its net asset value and Frontline at a small premium.
Euronav would receive a boost, he said, as any deal would imply that it drops its arbitration against Frontline over allegations that it unilaterally pulled out of the merger.
“In our view, these have been dragging down the story this year, and it would consequently be positive for both to see this story ended,” Haavaldsen said.
Overall, given that Frontline would probably be growing larger and Euronav smaller, investors might be more bullish on Frontline, he added.
On the other side, he said: “A key detail would be what strategy the Saverys then are going to pursue for Euronav, but given recent ordering activity we would not really expect a dramatic shift at this point (which they also have stated; the ‘transition-efforts’ are more long term).”
