Delivery analysts have given the thumbs as much as yesterday’s huge tanker merger information between Euronav and John Fredriksen’s Frontline, whereas cautioning that the sector will stay extremely fragmented. The 2 European giants plan to mix their fleets in all share deal to create the continent’s largest tanker agency through which Fredriksen will maintain a number one 22% stake as soon as the deal is authorized. The $4.2bn entity can be referred to as Frontline, and be headed by Euronav’s CEO, Hugo De Stoop.
In an replace to shoppers yesterday, Evercore ISI analysts stated the merger would create a “supersized tanker behemoth” in an trade the place most firm market capitalisations are decrease than $1bn.
“The potential mixture would create a very investible tanker firm with a significant and liquid market cap, which might additionally successfully develop into a bellwether for not simply tanker equities however maritime transportation as an entire attributable to its enhanced scale,” Evercore ISI recommended.
The potential mixture might develop into a bellwether for not simply tanker equities however maritime transportation as an entire attributable to its enhanced scale
The merged firm would develop into the most important proprietor operator of crude tanker tonnage, with a mixed fleet of 69 VLCCs and 57 suezmax vessels and 20 LR2/aframax vessels. For perspective, DHT, which might be the second largest crude tanker firm following the merger, has a complete of 26 VLCCs.
Mark Williams, founding father of UK-based consultancy Delivery Technique, instructed Splash: “Regulatory and monetary pressures, plus the prospect of us hitting peak oil demand within the lifetime of ships constructed since 2015, imply that consolidation might be inevitable within the tanker markets. To maneuver now whereas tanker charges are very underwater signifies that Frontline thinks the crude oil freight market is due a restoration.”
BIMCO’s chief transport analyst, Niels Rasmussen, identified that the tanker market will stay very fragmented even after such a merger with knowledge from Banchero Costa yesterday suggesting the mixed Frontline/Euronav entity would command round 10% of the worldwide VLCC and suezmax fleets.
Commenting on the mega merger information through LinkedIn, Roar Adland, transport professor on the Norwegian College of Economics, stated the bigger market cap would give the merged agency higher phrases each within the fairness and debt markets.
The Euronav model, prone to disappear when the deal is concluded, has been round since 1989, coming underneath the management of the Saverys household in 1997. Talks between the Saverys household and Fredriksen over a potential tanker tie-up have been occurring and off for a few years, with first discussions on the matter reported 23 years in the past.
For Fredriksen, 77, the richest man in Norway, the Euronav deal reveals he nonetheless has an urge for food for the large offers, having constructed a profession on the again of audacious takeovers. It additionally indicators that the worst is over from the restructuring of Seadrill, his drilling contractor, which has taken up a lot of his time in recent times.